Surplus Optimisation vs Two Portfolio Approach

CD someone please explain how these two approaches differ on reading they both sound very similar

Surplus opt uses efficient frontier based on size of surplus

Two portfolios has 1 hedging portfolio (conservative) and one growth portfolio

Ok so if I’m understanding this correctly surplus optimisation has just the one single portfolio which uses the efficient frontier for the entire portfolio based on surplus size (hence the reason it does not consider liabilities)

Two portfolios actually does have 2 portfolios one to hedge the liability and the excess amount to maximise risk adjusted return

Correct, except the part that you say surplus optimization doesnt consider liability. It is considered liabilty relative approach.

Hedge/return: simple. require a plan that is over funded. Ensure liabilities are being met, chase return with rest.

Surplus optimisation: simple. Does not require over funded. MVA. Highest level of surplus per level of volatility.

Both are liability relative approaches

What exactly does “highest level of surplus per level of volatility mean”? I immediately revert to thinking of surplus as being equivalent to an over-funded status and that this surplus (from over-funding) is managed with MVO to maximize return per unit of risk. But I see here that this does not require a plan be over-funded…

when a plan is overfunded both Surplus optimization and hedging risk/return seeking will both produce the same or similar conservative allocation? < - is this right? I had a question on this in a practice test and missed this one going off memory here.

I believe that is true, this is my best logic for it:
Conservative surplus optimization: would be mostly a safe instrument such as bonds to match the liabilities, then may incorporate some riskier assets in addition to those
Hedging/return seeking (conservative by definition): would be mostly a safe instrument such as bonds for the entire hedging portion, then the return-seeking may incorporate riskier assets

I think it’s also only the conservative part that matters for making these similar, they would be similar for both overfunded and underfunded (100% bonds for underfunded)

I’m also not the best at this section so someone please correct me if I have this wrong