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Whitepaper

What Interest Rate Management Can and Can’t Do: Three Considerations for Plan Sponsors

July 6, 2023

As liability-driven investing (LDI) has become mainstream over the past 15 years, many pension plans have launched their LDI initiatives with a program seeking to diminish or eliminate the impact of changes in interest rates on their plan’s surplus. When talking to investors about such programs, we’ve noted a number of frequent misconceptions about what such an LDI program can achieve—and, just as importantly, what it can’t. In this paper we discuss top items for consideration by clients considering an interest rate management program.

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David Phillips, CFA, ASA, EA

Director, Liability-Driven Investment Strategies

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