In 2019 plan sponsors witnessed a familiar, albeit more extreme, combination of returns that has also been the theme of the entire previous decade. Equities rallied, long term interest rates fell, and funding levels didn’t increase to levels that plan sponsors expected for a typical pension plan. However, some sponsors utilized equity derivatives to make the investment portfolio work harder while managing risks more efficiently, and consequently saw their plans’ funded ratios materially increase over the same time period.
Public sector and church pension plan sponsors face unique but similar financial challenges. This paper covers an alternative approach to constructing investment portfolios that can better help meet their needs by seeking equal to or greater investment returns with less funded status volatility than conventional investment strategies.
Private Equity is illiquid and challenging to benchmark. Many investors use “S&P 500 +3%” in order to compare performance in the absence of an observable, investable asset. This paper describes a methodology for creating a private equity proxy or replication strategy using derivatives.
With the growing number of annuity purchases taking place in the market today, it is imperative that plan sponsors understand the fiduciary implications for implementing this de-risking strategy.
This article addresses three major features common to most TDFs’ structure: asset allocation (specifically, equity exposure), management style (including active and passive management, use of proprietary funds, and tactical asset allocation), and fees – which, if not evaluated carefully and on a manager-by-manager basis, could result in a mismatch between an employer’s goals and participant investment results.
Strong markets coupled with favorable changes in corporate tax rates made 2017 a very good year for pension plan sponsors. The continuing run up in the equity markets meant that most plan sponsors saw funded status improvements in 2017 in spite of discount rate declines.
The equity markets have been extremely volatile over the past two weeks. Are these market movements perhaps the start of something big, or just the first step to volatility returning to a more typical level?
Many pension plan sponsors are in the process of figuring out what assumptions they will be using to value liabilities for their 2017 fiscal year-end disclosures. This article looks at what has changed this year and what that means for pension plan liabilities.
Why plan sponsors should consider breaking the link between investment and plan costs
On October 19, 2017, the Internal Revenue Service announced dollar limitations for pension plans and other retirement-related items for 2018. The Social Security Administration announced the 2018 Taxable Wage Base a week earlier, while the Pension Benefit...