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Target Leverage Funds & DB+ A Uniquely Efficient LDI Solution

Pension schemes increasingly need to use their assets more efficiently. 

Our innovative LDI solution helps schemes make the most effective use of their cash, while dramatically reducing the governance burden and unlocking the potential of added diversification.

What Schemes Need

Defined benefit pension schemes have three major requirements:

Growth – to generate returns in order to meet funding targets.

Income – to meet their pension payments when they fall due.

Protection – to manage funding-level volatility, helping to protect against changes in interest and inflation rates.

Maximising portfolio efficiency helps increase the probability of achieving all three of these objectives.

A New Approach

Our aim was to develop a solution that combined the key attributes that make leveraged funds efficient while decreasing governance complexity — all in an integrated, easy-to-implement package.

What An Ideal Solution Should Provide

An ideal solution to help defined benefit schemes meet their objectives should achieve three key aims:

Capital Efficiency – to free up capital so that it can be used elsewhere, for example, to make payments to pensioners or to invest in growth or diversifying assets.

Collateral Efficiency – helping to minimise the capital buffer needed to maintain leveraged exposure. An ideal solution would enable efficient movement of collateral between components.

Flexible Allocation – to allow schemes to tailor their allocation between different asset classes and also allow allocations to evolve over time as schemes de-risk.

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