Tom McCardan

AI Summary

→ WHAT IT COVERS Rising interest rates transformed pension funded status from underfunded to over 100%, creating opportunities for sponsors to derisk plans through liability-driven investing strategies across corporate, Taft-Hartley, and public sectors. → KEY INSIGHTS - **Three Plan Sponsor Groups:** Sponsors now fall into three categories: those exiting pensions via insurance transfers, those maintaining liabilities with fixed-income-heavy derisking portfolios, and those pursuing growth through open or underfunded plans. - **Multi-Sector Portfolio Construction:** Diversifying beyond traditional long-dated double-A corporates into securitized credits, below-investment-grade bonds, and credit derivatives provides better relative value while managing tracking error to accounting liabilities through thoughtful asset allocation. - **Derivative Implementation Strategy:** Interest rate derivatives enable shorter-duration credit positions while maintaining liability hedging, allowing rapid large-scale transactions and rebalancing as sectors move, with treasuries or cash reserves providing necessary collateral for floating-rate exposures. → NOTABLE MOMENT The American Rescue Plan Act injected eighty billion dollars into Taft-Hartley pension plans with mandated liability-driven investing principles, fundamentally shifting multi-employer plans toward fixed-income strategies previously used only by corporate plans. 💼 SPONSORS [{"name": "PGIM Fixed Income", "url": "pgimfixedincome.com"}] 🏷️ Liability-Driven Investing, Pension Derisking, Multi-Sector Fixed Income