Hartej Singh, head of public credit at the Pension Insurance Corporation (PIC), is our guest for the first episode of series six of The Professional Investment Podcast. He chose Professional Pensions story that defined benefit pension scheme surpluses increase to £210bn in the first quarter of 2026 as his news story of the week.
While this undoubtedly a good news story after two decades of deficits, it’s important the industry doesn’t think surpluses are guaranteed forever. There are number of plausible scenarios where low bond yields could return.
To avoid being caught out, pension schemes need to lock in their surpluses by removing interest-rate risk and they can then think about how they can invest that extra capital.
We discussed how the investment universe of life insurance companies is constrained by regulation and long-term nature of their liabilities. Hartej explained how that pushes insurers to invest in long-term, stable cash flows in high quality companies and governments.
While PIC would prefer to invest in the UK as it will be paying liabilities in sterling, it often ends investing overseas due to the lack of investment opportunities. The UK corporate bond market has not grown over the last decade.
Hartej suggested the UK could look at replicating the US municipal bond market to make it easier for investors to fund our much-needed infrastructure such as homes, hospitals, transport and green infrastructure.
We unpacked the innovation in fixed income markets with the edges between public and private markets blurring and how companies were starting to securitise bonds using assets which could be a good way to finance high-quality companies.
Finally, we talked about how life insurance companies need to invest for many decades into the future made them think hard about finding sustainable – in both senses of the word – investments. Hartej said this led them towards green infrastructure projects.
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