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Where are banks on their ESG journey?
The banks are on a journey, and I think you can see how in the future they will continue to be the conduit for policies and for regulatory change within the ESG sector. Just as capital has improved over the last 10 years, driven by regulation, you can see how the sustainability policies that are driven by the regulator will be facilitated into the real economy via the banks.
If we think there is EUR 4.7 trillion of spending needed over the next 10 years to meet the 2030 targets, EUR 3.5 trillion of that will come through the private sector, and the banks will play a huge part in that.
What does this mean for pension schemes coming to market?
In a bid to take advantage of full buy-in being within an affordable range sooner than expected, schemes are accelerating their approach to market.
Commonly this means that schemes with illiquid asset holdings that are unlikely to be well-suited to insurer balance sheets – are looking to purchase insurance, and so a strategy for dealing with these assets is needed.
At PIC we are to offer deferred premiums but a plan needs to be made for how value will be realised from these assets as part of a transaction.
Between 2012 and 2022, sponsors collectively contributed £200 billion in deficit reduction contributions
How are bulk annuity market dynamics changing?
Records continue to be broken in the bulk annuity market as demand continues for pension schemes looking to de-risk and insure their pension liabilities.
Over a period of historically low interest rates, Trustees and sponsors worked diligently to improve their funding positions. Between 2012 and 2022, sponsors collectively contributed £200 billion in deficit reduction contributions – or more than 20% of total dividend payments .
Sustained contributions, de-risking of assets and a sudden change in interest rates across the market has led to aggregate funding levels shifting from deficit to surplus. Sponsors have the opportunity to recoup all of this funding and more, without members’ benefits being put at risk by moving to buyout.
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watch the interview here
or read his
views below
With pension schemes increasingly looking to accelerate their path to buyout, managing illiquid assets has become a critical challenge. In this video, Matt Richards, Head of Origination Structuring at PIC, discusses how trustees can proactively prepare their assets, ensuring schemes are ready for the complexities of full scheme buyouts.
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Trustees need a proactive approach to asset preparation, ensuring they’re in the best possible position ahead of market entry, says Matt Richards
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1 Source: https://bit.ly/3gKn2ZJ
2 Source: https://bit.ly/3H3OXi1
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ESG considerations
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Investing in smaller/medium sized companies may carry higher risks than investing in larger companies.
For professional investors only. The value of investments and income from them may go down as well as up, and you may not get back the original amount invested. This is a marketing communication. The views and opinions contained herein are those of the author and may not necessarily represent views expressed or reflected in other communications. This does not constitute a solicitation or offer to any person to buy or sell any related securities or financial instruments.
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How does PIC deliver for its policyholders?
Our policyholders are at the heart of everything we do. PIC’s purpose is to pay the pensions of our policyholders. It might sound simple, but it is the cornerstone of our business and leads everything that we do.
Trustees have shown time and time again that member experience is a critical factor in decision making. Recently we have seen that non-price factors are key, and Trustees have selected PIC in several cases where we have not been the cheapest price.
We have had many repeat transactions with Trustee boards over time proving that we deliver on the promises that we make.
We also consider our social value a key factor in our purpose and delivery, and we know that this is a key factor for Trustees when considering their insurance partner.
We are major investors in UK infrastructure and regeneration projects. We think that, as well as providing secure, long-term cashflows that match the pension payments we have promised to pay our customers, such investments are key to the delivery of social value, and are essential in driving economic growth in the UK.
DELIVERING FOR POLICYHOLDERS
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COMING TO MARKET
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MARKET DYNAMICS
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Introduction
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Michael Dicks on the key contributors that underpinned PGIM Wadhwani Keynes Systematic Absolute Return Fund’s double-digit return in 2022
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Bank retrenchment coupled with regional bank pressures has continued to result in opportunities
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When an investor like PIC assesses a potential investment, one of the key factors we look at is the sustainability characteristics of the project over the very long-term. We seek to make the development as attractive as possible to potential residents (who themselves are increasingly aware of socially responsible businesses), and manage the potential political and regulatory challenges over the lifetime of the investment.
Regeneration projects create significant social value for local areas, including skilled jobs, apprenticeships, improved healthcare outcomes, and economic inflows into local business.
We have a major role to play in the future development of our towns and cities. Our investments span the whole of the UK, just like our policyholders do.
The whole of PIC’s proposition is designed around our purpose, our customers, and delivering social value.
The whole of PIC’s proposition is designed around our purpose, our customers, and delivering social value
Between 2012 and 2022, sponsors collectively contributed £200 billion in deficit reduction contributions
would YOU like to learn more about how we can help you with de-risking your pension scheme?
Between 2012 and 2022, sponsors collectively contributed
£200 billion in deficit reduction contributions