Retirement Update

Retirement Update – April 2018

by | Apr 5, 2018 | Industry Updates | 0 comments

Key Takeaways:

✔ Discount rates dropped slightly in March, with increases in short-term rates overshadowed by falling longer term rates.

✔ Volatility in the markets picked up due to protectionist tariffs, investors worrying the Fed might raise rates faster than expected and a Facebook data breach which contributed to a broad selloff.

✔ Funded status generally decreased in March.

March 2018 Summary

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.

Discount Rates & Asset Returns

Discount rates fell 0.05% from last month and are about 0.10% lower than rates at this time last year. However, rates remain 0.35% higher than rates at the end of 2017.

Most equity markets ended the month down approximately 2% as volatility increased due to protectionist tariffs, investors worried about the Fed raising rates too fast and a Facebook data breach. Interest rates generally fell and credit spreads widened. Longer term bonds had positive returns while short-term and high yield decreased.

What’s New at P-Solve?

P-Solve Speaks at the UCS Mid Sized Retirement & Healthcare Plan Management Conference in San Francisco

P-Solve director, Michael Clark, spoke at the most recent UCS Mid-Sized Retirement conference in San Francisco on pension plan management and what P-Solve believes to be the three pillars of successful plan management.

If you are interested in learning more about his presentation or attending any of the upcoming UCS Mid-Sized Retirement conferences please email for more information and to receive a UCS Mid-Sized Retirement & Healthcare Plan Management Conference discount code.


Ask P-Solve!


As a plan sponsor, are there any simple and inexpensive steps I should be taking to lower the costs of my Plan?


Much of the low-hanging fruit for reducing costs has already been tackled by plan sponsors (e.g. lump sum windows, retiree annuity purchases). One simple task that seems to be overlooked is a comprehensive death audit.  Many trustees will perform death audits on retirees, and there is little need to check on the status of actively working participants.  But some participants who have terminated but not yet begun to collect their pension may have passed away years ago.  To continue to treat these participants as if they are alive will add to the Plan’s liability. 

Another group to include in any death audit is the beneficiaries under joint and survivor annuities (where the participant is still alive).  We have found that these participants are almost never included in audits, and the trustees often will not have the name or SSN of these beneficiaries.  Many times, this information is gathered on a case-by-case basis as the participants pass away.  Gathering this data together and including it in routine audits will almost certainly identify a number of deaths, and lower the liability for each death record anywhere from 10%-50%, depending on the ages and genders of the participant and beneficiary. We estimate that 2%-3% of retired beneficiaries will be deceased (if such an audit has never been performed).  This could provide a meaningful reduction to the Plan’s liability, resulting in reduced accounting expense, lower minimum required contributions, and possible PBGC  savings and administrative expenses.   Many tools can be implemented for such an audit, ranging from simple Google searches, to paid online subscriptions, to using companies that specialize in finding participants and beneficiaries.  P-Solve is happy to assist with planning, organizing, and implementing a death audit for your plan.


SECURITY INDICES: This presentation includes data related to the performance of various securities indices.  The performance of securities indices is not subject to fees and expenses associated.  Investments cannot be made directly in the indices.   The information provided herein has been obtained from sources which River and Mercantile LLC believes to be reasonably reliable but cannot guarantee its accuracy or completeness.

CONFIDENTIAL:  For addressee use only, not to be disclosed to any other person without express consent from River and Mercantile LLC.  Past performance cannot be relied upon to predict future results.  River and Mercantile LLC is an investment advisor registered with the US Securities and Exchange Commission.

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