Simulated Pension Emphasizes Importance of Long-Term Risk Management Strategy
NEW YORK–(BUSINESS WIRE)–The funded status of the model pension plan examined by Sibson Consulting and Segal Marco Advisors dropped to 86 percent in the second quarter of 2019. The simulated retirement plan decreased by 2 percentage points since the previous quarter, as illustrated by the red line in the accompanying graph. This decrease in funded status is a result of a 4 percent asset gain offset by a 7 percent increase in liabilities.
“Equities ended in positive territory both internationally and domestically. U.S. stocks continue to outpace international stocks and within the U.S., large cap outpaced small cap stocks,” said David Palmerino, vice president with Segal Marco Advisors. “At the same time, the 10-year U.S. Treasury yield fell substantially, perhaps indicating that the market expects the federal funds rate to decrease.”
National Retirement Practice Leader Stewart Lawrence recommends that plan sponsors review their defined benefit (DB) plan metrics: “As plan sponsors review their approach for the second half of 2019, it is a good time to examine their plan’s risk-mitigation strategy,” he said. “Modeling capabilities are an important tool for mapping out the potential trajectories so that plan sponsors can make the most informed decisions and avoid suboptimal courses of action.”
To interview a consultant about the model plan, and how it can inform decision-making for pension plans, please contact Amira Rubin.
Sibson Consulting, a member of The Segal Group, provides trusted advice that improves lives. Sibson delivers strategic human resources solutions to corporate, higher education and non-profit employers. Sibson’s services include benefits, compensation, human capital management and change management consulting.
Segal Marco Advisors, a member of The Segal Group, provides trusted advice that improves lives. Segal Marco delivers innovative, client-driven investment consulting advice, outsourcing solutions, proxy voting and corporate governance services. Clients include joint boards of trustees administering benefit plans under the Taft-Hartley Act, state and local governments, corporations, non-profit organizations, endowments and foundations. The firm works with financial services firms through Rogerscasey, a Division of Segal Advisors, and with Canadian clients through Segal Rogerscasey Canada.
The Segal Group
Amira Rubin, 212-251-5000