Monthly Updates

Retirement Update – September 2018

Retirement Update – September 2018

The current “bull” market, which began in March of 2009 (9.5 years ago!), is now the longest ever according to most measures, exceeding the old record of 3,453 days (from 1990 to 2000). The average bull market has lasted just over 5 years, and the average bear about 1.7 years (Source: The Economist).

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Retirement Update – August 2018

Retirement Update – August 2018

The FTSE (formerly Citi) Pension Liability Index remains close to 2 year highs. For most plans this means liabilities will have fallen relative to assets and funding will have improved over recent periods. While the market expects the Fed to raise short term interest rates further several times, this expectation is already priced in to the long term interest rates that impact pension liability valuations. Recently, markets have been moving more in response to the risks of an escalating ‘trade war’.

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Retirement Update – July 2018

Retirement Update – July 2018

Rising rates should provide continued good news for many plans, especially those which are more heavily invested in equities, since liabilities will have fallen while assets grew modestly. The FTSE (formerly Citi) Pension Liability Index is now at its highest month-end value since January 2017. This an ideal time for plan sponsors who are in the process of an annuity purchase as they are able to capitalize on the high rates.

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Retirement Update – June 2018

Retirement Update – June 2018

Flat discount rates and equity gains will result in small funded status gains for plan sponsors during May. Year-to-date plans should be ahead of where they were at the beginning of 2018 due to rising interest rates. Discount rates continue to be the driving factor in funded status changes so far in 2018.

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Retirement Update – May 2018

Retirement Update – May 2018

The rise in discount rates during the month will decrease liabilities for most plans.  This, combined with a flat US equity market across the month, will have the majority of plans seeing an improved funded percentage.

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Retirement Update – April 2018

Retirement Update – April 2018

The small drop in discount rates during the month will increase liabilities for most plans, while the generally negative equity returns will ensure that investments don’t make up for this liability increase.  Neither the discount rate movement nor the asset performance was catastrophic, but the majority of plans will likely see a drop in their funded percentage.

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Retirement Update – March 2018

Retirement Update – March 2018

Plan sponsors should see little change in funded status as of the end of February. Negative equity returns offset decreasing liabilities. Discount rates rose by over 0.2% in February to their highest level since April 2017. At the same time, the 3.7% decline in the Russell 1000 index of US stocks represented to worst monthly performance for equities since January 2016, when stocks fell by 5.4%.

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Retirement Update – February 2018

Retirement Update – February 2018

Between an uptick in discount rates and strong equity performance, plan sponsors should see a nice bump in funded status as of the end of January. Discount rates recovered from the dip they took at the end of December. Equities had a solid month with US and international equities up around 5% and emerging markets over 8%.

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Retirement Update – January 2018

Retirement Update – January 2018

Pension plan funded status likely took a small hit in December. The Citi Pension discount rate dropped 18 basis points during December implying a 2-3% increase in liabilities. This was offset by favorable returns albeit generally below 2%. Plan funded status for calendar 2017 months should be at least modestly improved for most plans; how much will depend on asset allocation.

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Retirement Update – December 2017

Retirement Update – December 2017

Most plans will continue to see funded status increases as equities continue to rally while discount rates remain steady. Even with discount rates down YTD, plans will most likely be better funded come year-end barring any drastic changes in rates or returns during December.

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