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An unnamed defined benefit scheme has given M&G a £400m mandate for a run-on solution that offers to generate return while continuing to match cashflows.
The 'cashflow-driven plus' or CDI+ solution is "for well-funded defined benefit pension schemes seeking to generate additional value by reducing the amount of assets that need to be held to meet liquidity and collateral requirements, while retaining flexibility over endgame planning", according to M&G.
"CDI+ brings together the best of M&G's investment and insurance capabilities to create a new insurer-backed run-on solution for defined benefit pension schemes – and potentially consolidators like superfunds and master trusts," said Gurbani Swanni-Leach, who heads up pension solutions at M&G Investments.
"As trustees look for ways to generate additional value from their assets while retaining flexibility over their long-term plans, CDI+ helps schemes keep more assets invested while giving trustees greater confidence they can continue meeting member payments, even during periods of market volatility," Swanni-Leach explained.
Kerrigan Procter, managing director corporate solutions at M&G Life, added: "CDI+ enables schemes to invest like an insurer, with an insurer. Alongside our bulk annuity offering, CDI+ demonstrates how M&G can support schemes throughout their journey, from running on assets to securing member benefits through to buyout."
The run-on solution aims to help schemes stay invested in return-seeking allocations for longer while giving trustees greater confidence that pension payments can continue to be met. The firm says CDI+ enables it to support DB schemes across a range of endgame strategies, including self-managed and delegated run-on arrangements, as well as bulk purchase annuities or other forms of consolidation.
M&G previously provided new solutions for DB endgame with the first ‘value share’ buy-in of £500m with the well funded pension schemes of an unnamed sponsor in 2024. Under this model, scheme members are insured in the same way as with a traditional buy-in, while the scheme sponsor participates in the financial risk and reward generated from insuring its schemes.
