The liquidity kink is therefore a reality for many. We discuss how the market is evolving and revisit our checklist for dealing with illiquid assets.
In brief, the liquidity kink relates to the observation that a buy-out transaction typically requires a pension scheme to sell illiquid assets prior to transacting with an insurance company.
This paper looks at:
- Pension scheme funding improvements and the demand for buy-out transactions.
- The evolving appetite from insurers to hold illiquid assets.
- What this means for pension schemes, especially those wanting to buy-out with an insurer and holding illiquid assets. We revisit a checklist of ways schemes can deal with illiquid assets.