Will fully funded Canadian plans finally pull the LDI switch?
Slowly but surely, they’re coming back. By most measures, Canada’s defined benefit (DB) plans have managed to climb back up since the dark days of 2008, when the average funded status for Canadian plans hit an all-time low. But as more plans reach — and surpass — the fully funded mark, liability-driven investing (LDI) is now a viable option for those who want off of the rollercoaster of volatile returns. At the same time, LDI is now a possible path to de-risking as more plans seek to get out of the DB pension space altogether. Experts at our roundtable spent a few hours in August talking about the state of LDI in Canada and why they think Canadian plan sponsors lag behind their global peers when it comes to implementing these strategies. As Canadian pension funds get healthy again, they’re getting clearer on what LDI means, how best to implement a strategy, and why it’s wrong to let worries over interest rates prevent plan sponsors from starting down an LDI path.