Risk management firm Ortec Finance has published a new whitepaper examining how macroeconomic developments — particularly declining interest rates — can translate into significant balance-sheet risks for US pension funds, and how strategic hedging approaches can help build long-term funding stability.
The report, titled ‘From Volatility to Stability: A Macro Hedging Approach for U.S. Pension Systems’, is set against a turbulent 2025 backdrop in which global markets oscillated between optimism and caution. Institutional investors spent much of the year weighing easing inflation trends and strong equity gains against policy uncertainty, structural valuation concerns and mixed macroeconomic signals. The result was some of the most volatile market episodes since the 2008 financial crisis, as confidence and risk aversion alternated throughout the period.
At the heart of the whitepaper is an exploration of how falling interest rates can ripple through a pension fund’s balance sheet. Using a stylised case study, Ortec Finance illustrates how such macroeconomic shifts can erode funding stability — and demonstrates that incorporating interest rate hedging strategies can meaningfully reduce downside risk in an uncertain environment.
Ortec Finance approaches these challenges through a balance-sheet perspective that recognises the close relationship between assets, liabilities and macroeconomic conditions. Through its Strategic Risk Management and ALM framework, the firm employs forward-looking scenario analysis to help pension funds understand how evolving market conditions and economic drivers can influence long-term funding outcomes.
For more insights, read the whitepaper here.
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