PBGC Premium Increases Continue – How Sponsors Can Fight Back

PBGC Premium Increases Continue – How Sponsors Can Fight Back

The Pension Benefit Guaranty Corporation (PBGC) has announced the2020 Plan Year premium rates. This announcement reminds plan sponsors that providing the same pension benefits continues to be more and more expensive, especially if they maintain underfunded...
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...
PBGC Methods: Think Before You Switch

PBGC Methods: Think Before You Switch

Pension plan sponsors have less than eight weeks to re-visit a 2019 cost-reduction decision that could end up coming back to bite them in 2020. PBGC premiums for 2019 are coming due soon, and there are two options to determine the interest rate used when calculating a...