Defined benefit (DB) pension schemes in the UK are increasingly worried about liquidity, with four-fifths expecting to be cash flow negative within five years.

That is the headline finding of survey of 101 corporate sponsors and trustees by PricewaterhouseCoopers (PwC), which said more schemes are now looking to lower risk, higher yielding assets.
This has led to greater interest in illiquid assets matching cash flows, with many schemes also making liability-driven investments, and hedging interest rate and inflation risks.
"It's no surprise that people are thinking more about how their assets can be better matched to liabilities as schemes mature," Sinead Leahy, PwC head of pension investment consulting, said.
"The survey also indicates a widespread agreement that valuation methods need to be more closely aligned to investment strategy."
Seven in 10 respondents said now might be the time to consider alternative valuation methodologies, which Leahy said was understandable thanks to falling gilt yields and increased deficits.
Nearly two-thirds think their current investment strategy is on track to reach full funding within agreed recovery periods, and without additional support from their sponsor.
The survey findings, which are thought to be representative of all UK DB pension schemes, also show that more than half still manage their funding, investment and covenant separately.
Seven in 10 claim to review their investment strategy at least once a year, although larger ones with more than £1bn in assets are likely to conduct these more regularly.
Leahy said the Competition and Markets Authority's (CMA) review into the investment consultant market had put governance "increasingly under the spotlight", and expects this to continue.
"The survey suggests that, of the schemes which have fiduciary management, only half conduct an oversight of their provider every year," she continued.
"As the CMA recommendations begin to have an impact, we expect to see an upturn both in greater scrutiny when selecting a fiduciary manager and the oversight of these arrangements."