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October 2018 | Pension Solutions

Stars Aligning For Corporate Plans to Take De-Risking Actions

The market volatility experienced in early to mid-October speaks to the importance of plan sponsors having a governance structure and framework in place to effectuate changes to their portfolios in a timely manner when funded levels rise.   As we have seen in prior periods, improvements in funded status can dissipate quickly if portfolios are not adjusted to reduce asset and liability mismatches. A well-funded or even fully funded plan can still carry substantial risk for the sponsor if plan assets are not invested in a manner which aligns with plan liabilities.

 

Published on October 8, 2018

A confluence of factors – rising interest rates, robust US equity markets and tax reform-driven contributions – have contributed to a significant rise in US corporate DB funded levels. In particular, plan sponsors have benefited in 2018 from the dynamic of both rising interest rates and equity prices. A continued rise in long-term interest rates may prompt a more tepid equity market environment. In this short note we provide our most recent thoughts on the US corporate DB market and how plan sponsors may be thinking about de-risking today.

 

MORE INSIGHTS

July 2018 | Pension Solutions
US Corporate Pension Mid-Year Update: Domino Effect

The first half of 2018 was one of the most active periods for corporate Defined Benefit plans in recent years.

June 2018 | Pension Solutions
Pension De-Risking: Seizing the Inflection Point

US corporate defined benefit (DB) pension plan funded levels are at an important inflection point –the aggregate funded status of US DB plans is at its highest level since 2013 and close to its highest level since the 2008 financial crisis.

 

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