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
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