Pension Indicator Updated for February 28, 2021

Rising Interest Rates Lift All Boats

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

As we approach the one-year anniversary of the United States being forever altered by the coronavirus, there are several signs that America is turning the corner.  Vaccinations, while stumbling out of the gate badly, have rapidly come on board and now exceed 1.5 million per dayi.  This number will further be bolstered with the approval of Johnson & Johnson’s vaccination by the FDA. January’s unemployment rate of 6.3% is also the lowest since COVID hitii.  And, it appears the $1.9 trillion COVID-relief bill will make its way to the President’s desk.

One of the side effects of all of these developments is that interest rates have started to normalize as well.  The US 30-year Treasury yield ended February at a yield of 2.18% after hitting its all-time low this past summer under 1.2%.  Just since the beginning of this year, the yield has increased over 50 basis points.  This brings the yield in line with January 2020, or right before the world changed.

This is welcome relief for pension plan sponsors as it eases the pressure of the liability side of the equation.  The increase in yield has not come at the expense of equity prices, and hence you will see the positive news reflected in the charts and graphs below. 

From all of us at Findley, a Division of USI, 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.

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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) 6.5% 5.0% 2.8% 0.2%
 Recently Frozen 8.8% 7.3% 5.0% 2.3%
 Ongoing Traditional 11.2% 9.6% 7.3% 4.5%
 Cash Balance 7.0% 5.5% 3.3% 0.6%
Month-over-Month Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) 4.5% 3.5% 2.1% 0.4%
 Recently Frozen 5.6% 4.6% 3.2% 1.5%
 Ongoing Traditional 6.8% 5.8% 4.4% 2.6%
 Cash Balance 4.8% 3.8% 2.4% 0.7%
12-Month Change Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) 18.3% 14.7% 10.2% 3.4%
 Recently Frozen 20.0% 16.3% 11.8% 4.9%
 Ongoing Traditional
21.8% 18.1% 13.5% 6.5%
 Cash Balance 18.7% 15.0% 10.6% 3.7%

Frozen Plan 7 31

Recently Frozen Plan 7 31

Ongoing Plan 7 31

Cash Balance 7 31