Article by Tony Williams, President at PBI Actuarial Consultants Ltd., published in Employee Benefits News.
Pension funds that are currently underfunded on either a going-concern or a solvency basis due to the unraveling of global capital markets since August 2007 should seriously consider liability-driven investing to immunize them from market volatility.
Although the current unprecedented financial crisis has affected all investors, some pension funds that follow a liability-driven investment and funding strategy have successfully maintained their funded position.
For example, the Teamsters Canadian Pension Plan has subscribed to an LDI strategy for more than 10 years, and TCPP results to the end of 2007 reveal the pension fund is in a strong financial position.
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