Pension Investing – Hedging Interest Rate Risk with a Collar

Pension Investing – Hedging Interest Rate Risk with a Collar

Interest rates can move pension funded status up or down significantly. An interest rate collar can protect funded status against a decline in rates, while rate increases can still improve funded status. We’ve seen significant interest rate volatility in 2019.  Recent...
Convexity – The Forgotten Risk for Pension Plans

Convexity – The Forgotten Risk for Pension Plans

Pension risk is asymmetric in more ways than one Most sponsors of corporate pension plans are familiar with their risk being asymmetric: they only benefit to a point if a plan’s funding level improves, but are on the hook for all underfunding if it does not. This...
Pension Investing – Why Equity Derivatives Now?

Pension Investing – Why Equity Derivatives Now?

Equity returns of 15% or higher would usually be cause for celebration among corporate pension plan investors. However, despite these strong returns, many plan sponsors have seen a decline in their funded ratios during 2019.  This is mainly attributable to falling...
Retirement Update – August 2019

Retirement Update – August 2019

Retirement Update Key Takeaways: Discount rates were down slightly in July US Equities posted modest returns, with small losses on international stocks All else equal, July was a quiet month for pensions, with little expected movement in most plans’ funded status...
Interest Rates – Where to From Here?

Interest Rates – Where to From Here?

Understanding the dynamics that drive interest rates is critical to understanding the level of current rates, why they have changed in the past, and how they might change in the future. This understanding allows investors and pension sponsors to make informed...