Resource Library
Access a growing suite of resources, guides, and tools for understanding and applying liability driven investing in your organization or planning process.
Practical Tips for LDI
Start with the facts
To get the most from any LDI process, begin by collecting and reviewing all plan documents, actuarial reports, and benefit statements. Historic oversights often result from outdated information or missed regulatory updates. Revisit and update assumptions regularly as industry standards evolve.
Test your assumptions
Perform scenario and stress testing at regular intervals. Recording outcomes and comparing them to historical benchmarks can reveal gaps in risk management. This approach is especially useful in identifying vulnerabilities before they become liabilities.
Prioritize compliance checks
Partner with compliance professionals and reference the latest regulatory updates. Historical precedent in Singapore highlights the importance of aligning your process with current laws and best practices.
Liability Driven Investing (LDI)
ConceptLiabilities
ConceptAsset-liability matching
AnalysisRisk sensitivity analysis
AnalysisExamining how sensitive a plan is to changes in interest rates, inflation, or other economic factors that affect liability values.
Rebalancing
ProcessPeriodically reviewing and adjusting asset and liability allocations to reflect changing circumstances and regulatory requirements.
Scenario testing
MetricStakeholders
StakeholderFunding adequacy analysis
MethodAn actuarial model that projects future liabilities and assesses the adequacy of current assets to meet those obligations.
Monetary Authority of Singapore (MAS)
RegulationSingapore’s regulatory authority overseeing financial institutions, with a focus on prudential supervision and risk management.
Spiral review method
ConceptCommon LDI Questions
How does LDI help manage risk?
LDI aligns assets with future obligations, focusing on risk mitigation.
Who is LDI designed for primarily?
It is most relevant for pensions, insurers, and organizations with scheduled payments.
Why revisit liabilities regularly?
By prioritizing liabilities, LDI reduces the chance of underfunding in uncertain times.