Pension Indicator Updated for December 31, 2020

Putting a Bow on 2020

By: Matthew Klein, Principal, Findley, a Division of USI

We made it!  We got through 2020.  And while 2021 will certainly present its own problems, we need to deal with one final 2020 issue: year-end reporting.

On the bright side, the asset side of the balance sheet should be in pretty good shape.  Thanks to the November surge, most pension plan sponsors should be up from 9%-14% for 2020, which seemed inconceivable at the end of March.

For the other side of the coin, yields in our analysis were virtually unchanged in December, leaving interest rates for 2020 down between 70 and 85 basis points depending on your plan’s cash flows.  For most plans, that will mean an increase in Benefit Obligation of 7%-13% depending on the duration of the plan’s liabilities. 

Pulling it together, for the typical plan then, the relative funded status of the plan is unlikely to be a whole lot different than it was at the beginning of the year.  Considering what a year 2020 was, no news is definitely good news.

From all of us at Findley and Clearstead, we hope everyone and their families are safe and healthy. 

As always, thanks for reading, and drop us a comment on how we're doing.

This email address is being protected from spambots. You need JavaScript enabled to view it. or Clearstead  to discuss this information further.

For more information on the development of the Pension Indicator, please see our Disclosure document.

Information provided in this article is general in nature, is provided for informational purposes only, and should not be construed as investment advice. Performance data represents past performance.  Past performance is not indicative of future results.

Year to Date Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
Frozen (for several years) 0.2% 1.0% 2.2% 2.3%
 Recently Frozen -2.5% -1.6% -0.5% -0.4%
 Ongoing Traditional -4.9% -4.1% -3.0% -2.9%
 Cash Balance -0.4% 0.4% 1.6% 1.7%
Month-over-Month Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) 3.2% 2.6% 1.9% 0.8%
 Recently Frozen 3.3% 2.7% 1.9% 0.9%
 Ongoing Traditional 3.4% 2.8% 2.0% 1.0%
 Cash Balance 3.3% 2.6% 1.9% 0.8%
12-Month Change Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) 0.2% 1.0% 2.2% 2.3%
 Recently Frozen -2.5% -1.6% -0.5% -0.4%
 Ongoing Traditional
-4.9% -4.1% -3.0% -2.9%
 Cash Balance -0.4% 0.4% 1.6% 1.7%


Frozen Plan 7 31

Recently Frozen Plan 7 31

Ongoing Plan 7 31

Cash Balance 7 31

Disclosure

FINDLEY

 

Findley is an independent consulting firm and trusted business partner. We help you make critical decisions about employee benefits, compensation, and change management to make sure your human resources strategy aligns with organizational objectives. We provide strategic counsel to help navigate the changing benefits landscape and successfully manage workforce issues.

 

 

Clearstead Logo

 

 Clearstead is a leading institutional and private client advisory firm.  We are relentless in providing superior solutions so clients can exceed their aspirations, and build stronger legacies for their families, their communities, and themselves.  We do so with our authentic, steadfast, and innovative employee and board-member owned firm of nearly 80 professionals who work to tackle complex investment, financial, tax, and governance needs of our institutional and private clients.