Managing Pension Gains: LDI Design in a Stronger Funded World

Canadian defined benefit pension plans are in a position of historic strength. The central question is no longer “how do we earn our way out?” but rather “how do we protect what we’ve earned?” For many sponsors, that question points directly to liability-driven investing (LDI) – and whether the current approach is still fit for purpose. 

This white paper from Manulife Investment Management examines how stronger funding levels are changing the role of LDI, and why hedge design may matter as much as hedge allocation. Readers will gain insight into how liability-aware benchmarks can improve the measurement of success, the trade-offs involved in plan-specific hedge construction, and how increasing liability alignment can strengthen funded-status outcomes. Whether your plan is deepening its commitment to LDI or evaluating the approach for the first time, this paper offers a rigorous, evidence-based framework for making the right call. 

Key takeaways: 

• Understand why stronger funded positions may call for a shift in focus – from return generation toward protecting gains and reducing funded-status volatility. 
• Learn how liability-focused hedge design can improve alignment between pension assets and obligations. 
• Explore why traditional market benchmarks may not fully reflect pension plan objectives or hedge effectiveness. 
• Examine how liability-aware benchmarks can provide a more meaningful measure of LDI success. 
• Assess the trade-offs between hedge precision, liquidity, implementation complexity, and governance when evaluating LDI strategies. 

With Canadian pension plans at an important inflection point, now is the time to reassess your investment policy, liability hedge, and LDI approach. Download the white paper and take the first step toward building a stronger, more resilient funded position. 

Sponsored by: