Post by AlternativeSoft

Two numbers published this month put the 2026 pension investment challenge in sharper focus than anything else we could say. The Milliman 100 Pension Funding Index rose to 109.6% as of 31 May 2026 — the highest funded ratio recorded since July 2001, with the funded status surplus reaching $116 billion. And published today: the competitive pension risk transfer cost has fallen to 99.7% of a plan's accumulated benefit obligation — a three-year low, and the first time the competitive index has fallen below 100% in the current cycle. Milliman's co-author noted that insurer pipelines are already filling and "we expect a busy second half of the year for PRT projects." These two data points define the exact strategic moment that every DB investment committee is sitting in right now. The highest funded ratio in 25 years. PRT now available at below the accounting value of your liabilities. And a return requirement that has simultaneously gone up, not down — because a fully funded plan now needs to generate 7.3% annually to reach a 110% funded ratio over a decade, up sharply from 4.7% in the low-rate era. The surplus is real. The challenge is not over. We published a whitepaper today that takes the five decisions that flow directly from this moment and works through each one analytically — not from the perspective of what the textbook says about LDI, but from the perspective of what an investment committee actually needs to decide before year-end. Decision 1: LDI hedge ratio when the Fed may cut at the short end while long rates stay elevated. The optimal answer is scenario-specific and it is not static. Decision 2: Alternatives at 40% of assets. The NAV lag problem means your funded status number may be six months old. That matters when three days of market movement can move the ratio by eight percentage points. Decision 3: Co-investment. 52% of LPs now consider it a prerequisite, not a nice-to-have. The funds accessing the best opportunities are those whose investment committees can move in two weeks, not two quarters. Decision 4: Hedge funds — are they genuinely diversifying your portfolio or replicating factor exposures you already carry in public equity and private equity? Without factor attribution across the full book, you do not know. Decision 5: PRT below 100% of ABO. The window Milliman described this morning as already filling. Whether to act now, wait, or execute a partial transfer requires real-time funded status modelling and actuarial scenario analysis running simultaneously. The whitepaper: https://lnkd.in/e7HZgi7G BlackRock Pensions & Investments #PensionFunds #DefinedBenefit #PensionInvestment #LDI #PensionRiskTransfer #PRT #PrivateMarkets #AlternativeSoft #InstitutionalInvesting #AlternativeInvestments #DBPensions #FundedStatus #PortfolioConstruction #HedgeFunds #PrivateEquity