Liability-driven investing (LDI)

What themes have we been seeing among corporate pension plans?

It’s been an exciting time lately for corporate pensions. The average funded ratio has risen to an overfunded position, and interest rates are now as high as they’ve been in over a decade. Because of this, a lot of plans are now looking to expand their Liability Driven Investing (LDI) programs to help preserve their funded levels.

At BlackRock, we manage over $300 billion in LDI assets globally¹ …and we’ve helped pensions across regions in their de-risking approaches.

What we’ve seen is that many plans have established their base long duration exposures, but that there’s room to reduce funded ratio risk even further. Taking a closer look at the plan’s target hedge ratios, curve exposures, and even the types of LDI assets used can help avoid unintended outcomes and potentially improve risk adjusted returns.

At BlackRock, we think that plans can benefit from more flexibility in their fixed income buckets. This can include capital efficient Treasury funds, all the way through to private assets.

In this new regime of plan surplus positions, it’s common for plans to be asking, “what’s the right next step?” This requires finding partners with experience. Our LDI team works with clients to combine world class risk technology and pension expertise to help provide better outcomes for plan sponsors and their participants.

¹ BlackRock, as of December 31, 2023.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of February 2025 and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. There is no guarantee that any forecasts made will come to pass. Any investments named within this material may not necessarily be held in any accounts managed by BlackRock. Reliance upon information in this material is at the sole discretion of the reader.

This material contains general information only and is not intended to represent general or specific investment advice. The information does not take into account your financial circumstances. An assessment should be made as to whether the information is appropriate for you having regard to your objectives, financial situation and needs.

Capital at risk. All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed. You may not get back the amount originally invested.

For Institutional Use Only; Not for Public Distribution

2025 BlackRock, Inc. or its affiliates. All Rights Reserved. BLACKROCK is a trademark of BlackRock, Inc. or its affiliates. All other trademarks are those of their respective owners.