By Dave Chittim, Senior Vice President, Al Trezza, Vice President, and Peter Austin, Executive Director, Mellon Asset Management

Changes in the pension landscape are compelling plan sponsors to take a fresh look at their investment strategies, with the aim of minimizing interest rate risk. This re-evaluation is a direct result of a number of developments, including:

• The move toward market-based measurement, mandated by Congress and FASB
• The use of a segmented corporate yield curve to determine plan liabilities
• The need for roadmaps that guide sponsors from “freezing” a plan to termination
• Viewing pension plan management from shareholder perspective
• Heightened awareness of how interest rate changes impact plan liabilities

These developments have led to the growth of Liability-Driven Investing, or LDI: a process or strategy that involves the coordination of plan assets with plan liabilities. LDI strategies are tailored to specific plan needs, including interest rate sensitivity, inflation sensitivity, plan design features, nature of the company, and its workforce. This special report outlines how LDI can assist plan sponsors in many facets of asset-liability management.

For more information and a hard copy, please contact Peter Austin, Executive Director, Mellon Asset Management, at 617 248-6202.

The preceding information is based upon the analysis of historical performance of various asset classes and assumptions with respect to future economic conditions. Past performance is not an indication of future results. This information is not intended to provide specific advice, recommendations or projected returns of any particular BNY Mellon Asset Management product.