Do pension scheme illiquid investments present an insoluble issue?

Many pension schemes have found themselves in the position of being able to afford buyout earlier than anticipated following the LDI crisis. This is good news, but for trustees who had invested in illiquid assets with the intention of holding over a long-term time horizon, it may not be possible to realise these quickly to meet a cash premium. This potential barrier to transaction has been well publicised – in fact, in a survey carried out in our September 2023 webcast, over a quarter of our clients said that managing their illiquid assets was the main barrier to meeting their scheme’s endgame objective. In this article Gemma Millington provides a practical “3-step” guide as to how trustees can establish the optimal strategy for their scheme.

Conclusion

Many of the cases we have led this year – ranging from the record-breaking RSA transaction to sub-£100m deals – have involved finding suitable solutions to illiquid assets. In our experience, whatever the solution, trustees need to consider this issue carefully, holistically, and in good time, to ensure that they adopt the optimal strategy for their specific circumstances.