(Bloomberg) -- The UK’s planned pension reforms are likely to shield the gilt market from an expected rise in government bond issuance, according to Abdallah Nauphal, chief executive officer of Insight Investment.

Chancellor of the Exchequer Rachel Reeves is proposing to allow defined-benefit programs of companies to access their surpluses and plow them back into their core businesses as part of plans to revive economic growth. That could slow a trend of insurers taking over pension plans, tempering a potential bond selloff that might otherwise reach about £500 billion ($645 billion) over the next decade, Nauphal said in an interview.

With an uptick in debt supply combined with quantitative tightening by the Bank of England, “what you don’t want is that £500 billion gilt holders become sellers,” because insurers traditionally opt for more profitable investments in order to better manage those pensions, Nauphal said.

Insurers hold approximately 60% fewer gilts than such pension programs for similar liabilities, according to an estimate from researchers at Schroders Plc. That means when a pension fund’s obligations are transferred, gilts may be sold in favor of other assets including corporate debt and private assets. The government plans to sell £299.2 billion of bonds in the fiscal year starting April, £2 billion more than what’s planned for the current fiscal year and the most since the pandemic-era borrowing push.

Battling to jumpstart a weak economy, officials have been piling pressure on the wider pensions industry to commit more to domestic investments. Through reforms and voluntary deals, Reeves is hoping to release more private capital to “productive assets” in the UK.

Insight, which typically manages assets for pensions that haven’t been bought out by an insurer, estimates that about half of the industry’s surplus of £160 billion could be freed up within the next two years and used by companies to improve members’ benefits, invest in strategic projects or higher-yielding assets.

Nauphal, who made his name creating complex investing strategies to help UK pensions manage interest-rate and inflation risks, said the government will need to define further what exactly those assets could be as it considers creating tax incentives around it. The Treasury is expected to publish details of the policy changes in the spring.

Owned by Bank of New York Mellon Corp., Insight is one of the largest providers of so-called liability-driven investment strategies, or LDI, which are used by pension funds to protect themselves from falling yields in the government bond market.

Nauphal, 64, became known as the ‘godfather’ of LDI at Insight, overseeing nearly a 10-fold increase in assets under management — with risk-management products and LDI making up more than half of the firm’s assets. Insight competes with firms including BlackRock Inc., Legal & General Group Plc and Schroders.

LDIs shot into the global spotlight in late 2022 when then UK Prime Minister Liz Truss announced a slew of unfunded tax cuts that led to a spike in government bond yields. Many pension funds didn’t have enough ready cash to cover losses on their hedging strategies, and thus had to sell liquid assets including gilts — which drove yields even higher. The Bank of England had to step in to interrupt the cycle.

Nauphal isn’t concerned about a similar meltdown happening again anytime soon and said no crisis tends to be the same. A brief rout in UK bonds in January did evoke memories of the 2022 crash, but the market, this time however, proved more resilient.

Nauphal fled from his native Lebanon when he was a teenager and went on to study finance as well as information systems at George Washington University. Before joining Insight in 2003, he worked in senior investment roles at Rothschild Asset Management and Schroders.

The CEO is set to retire in the first half of 2025 and will be succeeded by Raman Srivastava, who was chief investment officer at Great-West Lifeco Inc. Post retirement, Nauphal said he’s thinking of a role in financial education and writing a “more personal” book.