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Pension Funding Update, November 2020

"Global stock markets started the month strong, but took a turn for the worse in the last week of the month and ended the month down 2-3%. Pension discount rates were up about 0.10%-0.15% from the previous month, but are still down noticeably for the year. For most pension plans, the equity losses for the month will have outweighed the liability gains due to the increase in the discount rate, leading to an overall decline in funded status."

Pension Plan Annuity Purchase Update

"72 total buyout contracts were sold in Q2 2020, a decrease of 35% compared to Q2 2019. Year to date sales of $6.7 billion are down 25% compared to the $8.9 billion sold in the first half of 2019.... Second half sales will likely be more in line with recent years and should easily exceed the total of the first half of 2020. Pricing continues to remain very competitive."

Retirement Update, October 2020

"The US stock market hit an all-time high on September 2nd but reversed course and declined close to 4% by month end. Pension discount rates were little changed from the previous month. Many plans will see funded status deteriorate over the month to varying degrees mainly depending on their level of equity exposure."

Pension Plan Glidepath: An Investment Opportunity

"Plan sponsors, especially those overseeing plans with high interest rate hedge ratios, can estimate equity market levels when growth assets would be sold. Knowing today the level of where future equity transactions will happen leads to an investment opportunity now for plan sponsors. The opportunity is to monetize the future decision to sell equities through the selling of a 'call' option and collecting a premium."

Retirement Investment Update, September 2020

"The US stock market had its best August since 1986, with the S&P500 hitting new all-time highs led by technology stocks. Pension interest rates increased as well, offsetting the declines seen in July. Many plans will see funded status improvements over the month that are relatively larger than a typical monthly move but will most likely see them still down year-to-date."

Retirement Financial Update: August 2020

"Pension interest rates tumbled another 0.40%, bringing the year-to-date decline to almost a full 1.00%.... [L]iabilities for most plans will have increased substantially during 2020.... While asset allocation plays a role, most plans probably saw their funded status stay the same over the month of July; however, due to the drop in interest rates this year, funded status has most likely deteriorated year-to-date."

Pension Funding Update, June 2020

"Market volatility continued throughout the month of May as the world continues to deal with the COVID-19 pandemic. The equity rally that began in April continued through the month of May, with most indices seeing continued recovery from March lows. Pension interest rates ended the month relatively flat, so for many plans, the equity gains would have outpaced liability growth and funded status should have improved."

Structured Equity Can Increase Funded Status

"[P]ension plan sponsors do not need to accept that significant funding level declines are the inevitable consequence of tough markets.... The investment strategy [discussed] in this article would have kept a pension plan that was 88% funded at the end of 2019 at almost 84% funded as of April 30, versus 80% funded using a traditional investment strategy."

Funding Relief May Be Coming for Pension Plan Sponsors

"While the current version of the [HEROES Act] does not have bipartisan support, it nonetheless offers plan sponsors a preview of the relief that may make its way into law in the not too distant future.... [1] All shortfall amortization bases and corresponding shortfall amortization installments for all plan years beginning before January 1, 2020 would be reduced to zero. [2] All new shortfall bases would be amortized over 15 years rather than the seven years prescribed under the current law.... [3] The 25-year average interest rate corridor for minimum funding would initially narrow to 5% from the current 10% ... The 5% corridor would remain in place through 2025 and would widen starting in 2026 through 2030."

Investment Forecast: May 2020

"Investing now is about treading a fine line between the significant support from central banks, the continued uncertainty for corporates and the global economy.... The positive moves in credit and equity markets in April appear premature, leaving markets vulnerable. [The authors] are waiting for a better opportunity to re-risk portfolios -- either driven by a further price fall, or by greater certainty about the future."