Public sector funds eye LDI techniques

Liability-driven investment has helped improve funding levels for countless corporate pension plans. Blake Evans-Pritchard looks at what the approach can offer for public schemes and why they have been slow to take it up

In the corporate world, basing your investment decisions on the sum of your current and future liabilities makes a lot of sense. This is why so many cash-strapped private pension funds have chosen to go down the liability-driven investment (LDI) path. By making sure that cashflows adequately match liabilities, they can protect their funding levels while at the same time capitalise on their upside potential.

But LDI has received a far less enthusiastic welcome in the public sector, even though