Pension Pulse Spring 2016

Inside this issue:
  • The funded status roller coaster takes a dip. Despite robust fixed income returns, modest overall asset gains did little to counter a spike in liability value.
  • Does rerisking pay? With plans aware of the advantages in glidepath strategies, we address the question of whether it pays to rerisk if funded status slips back along the glidepath.
  • Volatility buster: LDI + MTM. As companies transition to mark-to-market accounting, adopting liability-driven investment strategies will be key to controlling pension expense volatility.

Pension Pulse Fall 2015

Inside this issue:
  • The beginning of the end and the start of a trend? After nine years without a Fed rate hike, the beginning of the end of the era of rock-bottom rates looks ever more likely. It will have large implications for pension funded status.
  • Pension accounting as an element of corporate strategy: A plan’s results can affect its sponsor’s financials in three ways: on the balance sheet, in the income statement and through cash flow. Changes in funded status, by any measure, can influence corporate financial and ultimately corporate business strategy.
  • Meeting the challenge of growth in a liability-oriented portfolio: Even the most liability-aware pension investment strategies have to allow for inevitable contingencies by maintaining an allocation to growth-seeking assets.

Pension Pulse Spring 2015

Inside this issue:
  • Funded status slips as discount rates slide: Last quarter continued 2014's downward trend in Corporate America's funded status.
  • No time like the present: A constrained investment environment is casting allocation strategies in a new light.
  • Are pension plans hostage to diminished expectations? Four ways to top anemic benchmark returns.
  • Preparing for higher rates: With the prospect of higher rates and the persistence of low yields, plan sponsors should put policies in place that allow for derisking.
  • "Improved" longevity assumptions: Interest rate derivatives may be the most efficient way to counter the impact of revised mortality assumptions.
  • The risks in cash flow matching: Even with a cash flow matching program in place, a plan's liabilities can still grow faster than its assets.

Pension Pulse Fall 2014

Inside this issue:
  • Waiting for rates to rise, funded status takes a slight downturn: After 2013's monumental gains, Corporate America's pensions have eased up on the throttle this year.
  • Aligning DB plan strategy with the new mortality tables: Revised mortality tables are coming soon. Here are some steps pensions can take to get ready.
  • Continuing trend pension smoothing: Congress extends funding relief, turning corporate DB plans into unconventional revenue sources. We take a closer look at the implications for sponsor contributions.
  • Blending the two effects: increasing longevity and pension relief
  • Longevity increase + pension relief: What does it add up to? We assess the net impact of the year's good news/bad news stories on funded status.
  • Landmark pension research (second in a series): In this edition, we investigate Fischer Black's 1980 pension tax arbitrage model.
  • Funded status outlook from global markets strategist Michael Hood

Pension Pulse Spring 2014

 Inside this issue:
  • Where to next for funded status: After a January wobble, “Corporate America's” 2014 funded status remains volatile.
  • Overfunded vs. underfunded: Asset allocation is not the differentiator: Today’s “winners” really haven't done things differently from others since the 2008 crisis. Research shows that the winners had a head start and lower barriers to overcome.
  • Overfunded vs. underfunded: Who has more in fixed income: Funded status so far has not been the only factor in a derisking decision—the size of the plan relative to its sponsor is more important.
  • Creative ways of getting to fully funded: the example of AT&T: AT&T’s novel plan contribution up close.
  • The PBGC premiums increase: one more straw on the camel's back: The hefty hike hurts, but the decision to close the funding deficit right away is not straightforward.
  • Overfunded? Take advantage of increased illiquidity capacity: Even fully funded plans need a growth portfolio, and a strong hedge portfolio may allow for a large allocation to illiquid assets.
  • Landmark pension research (the first of a series): In this series debut, we summarize and comment on the findings of landmark research by Robert Merton, Zvi Bodie and Li Jin in their article "Do a Firm’s Equity Returns Reflect the Risk of Its Pension Plan?"
  • Funded status outlook from Global Markets Strategist Michael Hood
Inside this issue:
  • Rising assets, ebbing liabilities lift corporate funded status: Funded status is up 9% in the first half of 2013.
  • Should pension funds buy into buyouts? For the average U.S. plan, a buyout can increase risk instead of derisking.
  • So when does a buyout make sense? All options need to be modeled to determine which derisking tool is most appropriate.
  • The impact of bank downgrades on pension liabilities reveal the pitfalls of using AA yields as discount rates

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Inside this issue:
  • A trillion dollars later, are we still stuck in 2009? Four years haven't changed pension deficits.
  • 2013 — Bright prospects for assets, sobering consequences for deficits: Equity/credit correlation: adverse consequences for 2013 deficit
  • The 90% glass ceiling: Prospects dim for a 2013 funded status breakthrough
  • 2013 — Marching to the beat of the derisking drummer: 2012 was a tipping point; look for more derisking actions in 2013.
  • The depth of the buyout market? Long credit supply shortage could constrain pension buyouts.
  • IFRS pension changes: Will markets fall into the trap? A push is on to decipher USGAAP pension cost.