DB pensions: Private assets and preparing for an insurance buyout

Defined benefit (DB) pension schemes’ asset allocations to private/illiquid assets have been prevalent in the news in 2024. Pension schemes have invested substantially in recent years in asset classes such as private equity, property and various forms of private debt such as real estate debt, infrastructure debt and direct corporate lending. Numbers in the Pension Protection Fund’s (PPF) Purple Book imply the aggregate holdings in these asset classes across the private sector pension scheme universe is around £250bn.

The basic rationale for investing in these assets is that the pension scheme, as a long-term investor with largely illiquid liabilities, can monetise some of their asset liquidity by shifting some liquid assets into illiquid assets, thereby earning an illiquidity premium.

Read full article here: https://www.barnett-waddingham.co.uk/comment-insight/blog/db-pensions-private-assets-preparing-insurance-buyout/?utm_source=partner_content&utm_medium=globacs&utm_campaign=privateassets_insurancebuyout