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FundFire: Healthcare Pensions Playing Catch-Up with LDI Adoption

October 25, 2017 / by NEPC

FundFire article covered NEPC's Defined Benefit Plan Survey and Healthcare Highlights. NEPC's Dave Moore's comments were included in the story. Read a preview below.

Healthcare organizations with defined benefit pension plans have not been as quick as their corporate counterparts to adopt liability driven investment (LDI) strategies, but they should fall in line as their funded statuses improve and the interest rate environment recovers, industry experts say.

The number of health plans considering LDI dropped to 9% from 21% this year, while the corporate plans considering LDI solutions rose to 12% from 4%, according to NEPC’s 2017 defined benefit plan survey.

However, this is not necessarily indicative of a shift away from LDI for healthcare organizations. These plans are just a few years behind their corporate counterparts when it comes to implementing LDI strategies, says NEPC partner Dave Moore, who worked on the report.

“Back when the [Pension Protection Act of 2006] first hit a couple of years back corporate pension plans started immunizing, closing and freezing plans,” Moore says. “In healthcare, we’re starting to see the same thing. They’ve started a couple of years later.”

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Topics: Healthcare, News, Survey, Defined Benefit, Corporate Defined Benefit

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