De-Risking | Bank of America Merrill Lynch
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De-Risking: A Path to Liability Driven Investing for Pension Plans

Executive Summary

While liability-driven investing (LDI) is a methodical way for pension plans to stabilize funding throughout market cycles as compared to traditional pension investing, it can be challenging, especially for underfunded plans. The de-risking strategies developed by Bank of America prepare for periods when a plan’s assets and liabilities, prevailing rates and other factors align to help immunize part of the portfolio with fixed-income assets. This paper outlines considerations for pension plan sponsors that enable underfunded plans to dynamically adopt LDI while striving to improve their funded status.


  • LDI versus traditional pension investing
  • LDI following years of interest rate declines
  • De-risking approach to LDI
  • Implementing LDI: A fiduciary approach

This white paper is designed to provide general information for plan fiduciaries to assist with planning strategies for their retirement plan and is for discussion purposes only. Bank of America is prohibited by law from giving legal or tax advice, and recommends consulting with an independent actuary, attorney and/or tax advisor before making any changes.

This White Paper is for:
  • Plan sponsors looking to reduce risk in their pension plan portfolio
  • Plan sponsors evaluating investment strategies for pension plans
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