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Feature: The clock is ticking
30 April 2010
Global Investor/isf looks at the rise in popularity of liability driven investment (LDI) in the US.
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LDI Vanguard SSgA Legal & General
Have you ever sat through a gripping movie, transfixed by events on the screen, but all the time had a nagging feeling that you know how its all going to end?
That’s exactly the belief that some particpants in the US pension market are experiencing just now as they watch developments unfold in response to the Pension Protection Act (PPA).
The regulation, signed into law by President George Bush back in August 2006, broadly requires that underfunded pension schemes pay higher premiums to the Pension Benefit Guaranty Corporation and that they be fully funded by 2014.
The ruling applies largely similar standards and requirements to what was seen in the UK and the Netherlands almost a decade ago. In the UK, FRS17 was introduced in 2001 which meant, for the first time, that a pension plan’s defecit was placed in the sponsor company’s balance sheet – just as it...
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