Defined Benefits schemes accelerating to de-risk towards end-game – Russell Investments

While improving and maintaining funding levels remains the most important priority for UK DB schemes. there is a marked increase of 11 pct to 56 pct in the importance decision makers are placing on de-risking towards their endgame, compared to a previous analysis in autumn/winter 2022, Russell Investments said..

It also noted that in the move to de-risking, 24 pct of respondents plan to increase allocations to government bonds and 23 pct to investment grade credit. But allocations to illiquid assets : property (20 pct), private equity (10 pct), developed market equities (17 pct ) and emerging market equities (10 pct ) were expected to decrease,

The survey carried out in March/May was based on 132 DB schemes representing over £300 bln of assets under management.

And despite the fall-out from the UK’s mini-budget and gilt market sell-off, the long term impact seemed somewhat muted with 57 pct of respondents saying their hedge ratios remained unchanged, with 73 pct expecting to keep their current hedging levels for the next two years.

Inflation and central bank policies remain biggest single concern for decision makers (71 pct ) over the next 6 months, while unease over geopolitical conflict rose for 7 pct. The biggest challenge facing UK DB schemes is excessive regulation according to 49 pct of respondents.

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