Pension Indicator Updated for March 31, 2021

Pension Relief

By: Brian Hrabak, CFA, Clearstead

Big news this month: baseball is back and so is pension relief!  This year has provided great news for pension plan sponsors in terms of some interest rate relief (finally!) plus law changes that are designed to reduce funding requirements. 

After decades of declining interest rates, that pain may have finally abated in the short-term with rates moving back closer to pre-COVID levels.  The 10-Year Treasury yield increased from 1.41% to 1.74% during the month of March1. The higher interest rate environment resulted in a liability decrease of between 2.6% to 4.4% for March.

The American Rescue Plan Act of 2021 was signed by President Biden on March 11.  The two most significant changes to Single Employer plans are an extension of the underfunded amortization period to fifteen years instead of seven, and an extension of interest rate stabilization.  In terms of interest rate stabilization, the original 2006 Pension Protection Act was established, and later updated, to include interest rate boundaries for determining minimum required contributions.  The boundaries were set to start expanding in 2021 and would have required higher contributions at a time when businesses can least afford them.  Under the new law, the corridor range is being narrowed and will not start widening until 2026.  A 5% floor is also being added in case interest rates remain at historical lows.

The start of MLB baseball marks the official start of spring to many.  Hopefully the warmer weather, continued progress on COVID vaccinations, and pension funding relief bring you some smiles this month.

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) 11.0% 8.4% 4.8% 0.5%
 Recently Frozen 14.3% 11.7% 7.9% 3.5%
 Ongoing Traditional 17.8% 15.1% 11.2% 6.7%
 Cash Balance 11.8% 9.3% 5.6% 1.3%
Month-over-Month Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) 4.2% 3.2% 1.9% 0.4%
 Recently Frozen 5.1% 4.1% 2.8% 1.2%
 Ongoing Traditional 6.0% 5.0% 3.7% 2.1%
 Cash Balance 4.5% 3.5% 2.2% 0.6%
12-Month Change Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) 30.3% 22.8% 15.8% 6.9%
 Recently Frozen 31.6% 23.9% 17.0% 7.9%
 Ongoing Traditional
33.1% 25.3% 18.2% 9.1%
 Cash Balance 30.6% 23.0% 16.1% 7.1%

Frozen Plan 7 31

Recently Frozen Plan 7 31

Ongoing Plan 7 31

Cash Balance 7 31