Despite the expressed need of employing liability driven investing(LDI)strategies, Canadian plan sponsors are lagging behind their global counterparts in using such an approach, says a poll by SEI.
A total of 21% of Canadian respondents said they are currently employing an LDI strategy and only an additional 7% said they will be this year. Globally, 20% are currently employing LDI and an additional 12% will in 2007.
“In Canada, the level of investment expertise and resources required for LDI implementation is daunting, particularly when combined with a high level of plan design changes and the new funding and accounting rules,” says Andrew Kitchen, managing director, strategies & solutions. “In order to realize the desired benefits of LDI, organizations will need to consider changes to overall plan management to enable the execution of these strategies.”
Canadian plan sponsors are challenged when it comes to pension management and LDI implementation appears to only increase complexities. In Canada, 65% of those plans polled are open to new entrants and 84% are not planning any plan design changes in the future.
The poll surveyed 226 executives in Canada, the United States, the United Kingdom, and the Netherlands, who oversee pensions with assets ranging from US$30 million to more than US$5 billion.
To comment on this story email craig.sebastiano@rci.rogers.com.