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The idea that pension plan asset allocation should be tied to funded status is surprisingly young. It was not common practice before 2008. In April 2009, when we wrote a paper called “Liability-Responsive Asset Allocation,” it was (as far as we are aware) the first time that this approach was formally described in any detail. Just five years later, it’s taken as a given. Nobody is surprised when the financial statements of major corporations talk of “a broad global pension de-risking strategy” or note that a pension plan’s “interest rate hedge is dynamically increased as funded status improves.”1

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