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2018 Pension Review "First Take:" Groundhog Day

Each year, we perform a comprehensive review of defined benefit (DB) pension plans of every company in the S&P 500 and provide initial impressions on the issues and factors impacting corporate DB plan sponsors. We are pleased to share our 17th annual pension review, “First Take:” Groundhog Day, based on our initial analysis of the 50 largest US DB plans in the S&P 500 by asset size. Our title this year references the classic 1993 movie Groundhog Day, in which the same day repeats itself over and over again; this feels very similar to what happened to US corporate DB plans in 2018. We invite you to access the report, where we outline key findings from our analysis and several trends that are impacting the pension landscape, including the following:

In Like a Lamb, Out Like a Lion?

Despite hitting 10-year highs in funding levels intra-year, volatility erased nearly all these gains in 4Q’18.

Source: Goldman Sachs Asset Management, company reports; analysis based upon the US plans (when specified) of S&P 500 companies. The 2018 estimate is subject to potentially significant revisions over time. Estimates as of March 2019. The economic and market forecasts presented herein have been generated by GSAM for informational purposes as of the date of this presentation. They are based on proprietary models and there can be no assurance that the forecasts will be achieved. Please see additional disclosures at the end of this presentation. Past performance does not guarantee future results, which may vary. De-risking strategies should not be construed as providing any assurance or guarantee that as a result of applying the strategy an investor will reduce and/or eliminate risk, as there are many factors that may impact end results such as interest rates, credit risk and other market risks.

Fixed Income Allocations Continue Ascent

Actual allocations to fixed income moved higher in 2018, although lack of rebalancing at the end of the year may have played a role.

Source: Goldman Sachs Asset Management; company reports; population includes the US plans (when specified) of S&P 500 companies included in our “First Take” study; for illustrative purposes only. The economic and market forecasts presented herein are for informational purposes as of the date of this presentation. There can be no assurance that the forecasts will be achieved. Please see additional disclosures at the end of this presentation.

Similar Actions May Yield Similar Outcomes

Aggregate funded status for the S&P 500 universe fell notably over the 10-year period ending in 2017, despite contributions greatly exceeding new benefit accruals. If sponsors do not adjust their strategies, should they expect different results?

Source: Goldman Sachs Asset Management, company reports; analysis based upon the US plans (when specified) of S&P 500 companies. Please see additional disclosures at the end of this presentation. Past performance does not guarantee future results, which may vary.

2018 Pension Review “First Take:” Groundhog Day

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