Pension Indicator Updated for April 30, 2021

What To Do When the News is Good

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

I started my pension career in 1999, pretty much the height of the dot-com bubble.  I remember one of the very first valuations I did for a client, the asset return was over 70% for the year.  My long-running joke is that was the last time I gave a client good news.  And while that may not be completely accurate, the steady decline of bond yields during my working career coupled with multiple recessions has certainly meant there have been many more hard conversations than happy ones. 

All of which makes looking at the charts below hard to fathom.  The improvement in funded status over the past 10 months is remarkable.  You can certainly find right now investments that are touting 70% returns over the past 12 months because the markets hit bottom at the beginning of those periods.  Even if you use January 1, 2020 as the last moment things were “normal,” the S&P 500 is still up over 25%.1.

Now, coupled with the rise in interest rates, it is very possible that plan sponsors are seeing their highest funded status since before The Great Recession.  For plans that have been frozen for some time waiting for a better day, that day may finally be here. 

As such, I anticipate two things to keep professionals in the space very busy for the rest of the year.  First, if a plan is already on a glide path strategy, we could see risk being taken off the table and moved more into long bonds.  Second, we will see complete risk elimination through annuity purchases, and for some, full plan termination.  Neither of these are new concepts.  However, if you reviewed these ideas in the past and the timing wasn’t right, shake the dust off those papers and take a fresh look.  You could be pleasantly surprised.

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) 12.5% 9.6% 5.6% 1.0%
 Recently Frozen 15.2% 12.2% 8.2% 3.4%
 Ongoing Traditional 18.1% 15.0% 10.8% 5.9%
 Cash Balance 13.3% 10.3% 6.3% 1.6%
Month-over-Month Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) 1.4% 1.1% 0.8% 0.4%
 Recently Frozen 0.8% 0.5% 0.2% -0.1%
 Ongoing Traditional 0.2% -0.1% -0.4% -0.7%
 Cash Balance 1.3% 0.9% 0.7% 0.3%
12-Month Change Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) 29.7% 22.5% 15.4% 6.3%
 Recently Frozen 31.4% 24.1% 16.9% 7.7%
 Ongoing Traditional
33.2% 25.9% 18.6% 9.2%
 Cash Balance 30.3% 23.1% 15.9% 6.8%

Frozen Plan 7 31

Recently Frozen Plan 7 31

Ongoing Plan 7 31

Cash Balance 7 31