We find that most plans seek to satisfy benefit payments on a monthly basis using a combination of available cash and rebalancing opportunities. While this process may be sufficient during calm markets, we believe a cash flow solution can be additive to meeting ongoing benefit payments needs, especially during times of market stress (e.g. to avoid having to sell equities at depressed prices) and as plans mature (e.g. monthly benefit payments become a larger portion of plan assets). By allocating to a structured cash flow solution to help cover near-term benefit payments, there will be a greater likelihood of meeting cash flow needs. To avoid eroding the interest rate hedge or the expected return of the portfolio, we suggest combining a cash flow solution to a capital efficient LDI structure (e.g. using Treasury STRIPS or overlays).

^{Sources: Bloomberg, Barclays, Citigroup, Standard & Poor's, Loomis Sayles. Analysts shown from 12/31/2000-12/31/2018}

^{Charts are illustrative for presentation purposes only. Immunized solution is constructed using high yield corporate bonds with maturity less than 5 years to improve cash flow profile during initial years to benefit payments. Allocation relative to 12-year duration liability stream, discounted using Citigroup AA pension discount curve.}