Pension Indicator Updated for May 31, 2021

June Pension Indicator

By: Brian Hrabak, CFA, Clearstead

Investors digested mixed economic data, including the release of Fed meeting minutes in May, and optimism surrounding vaccinations and the reopening of the economy.  Growth assets ended the month on a positive note which boosted funded ratios.

After interest rates rose during the first quarter, May was the second straight month where yields moved lower. The 10-Year Treasury yield decreased 3 basis points from 1.63% to 1.60% during May1.  The very modestly lower interest rate environment resulted in a liability increase of 0.5% for May which was more than offset by asset gains in May of 0.8%-1.0%.

The Bloomberg Barclays Long Govt/Credit Index returned 0.81% for May, +2.79% quarter-to-date and -7.91% YTD1. Investment-grade corporate spreads were range-bound, but did tighten by 4 basis points for the month.

Except for fully hedged pension plans, strong year-to-date equity markets have helped boost funded ratios as the S&P 500 Index is +12.6% through May1.  As the U.S. economy is reopening, many Plan Sponsors are experiencing improvement in operations, combined with strong asset performance and liability relief.  A nice trifecta thus far in 2021 for those Kentucky Derby fans!

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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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.

1Bloomberg

Year to Date Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
Frozen (for several years) 13.0% 10.0% 6.1% 1.4%
 Recently Frozen 15.8% 12.6% 8.6% 3.8%
 Ongoing Traditional 18.6% 15.4% 11.3% 6.3%
 Cash Balance 13.7% 10.7% 6.7% 2.0%
Month-over-Month Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) 0.4% 0.4% 0.4% 0.4%
 Recently Frozen 0.4% 0.4% 0.4% 0.4%
 Ongoing Traditional 0.5% 0.4% 0.4% 0.4%
 Cash Balance 0.4% 0.3% 0.4% 0.4%
12-Month Change Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) 28.1% 21.6% 15.3% 7.1%
 Recently Frozen 29.3% 22.8% 16.4% 8.1%
 Ongoing Traditional
30.7% 24.1% 17.7% 9.3%
 Cash Balance 28.7% 22.2% 15.9% 7.6%


Frozen Plan 7 31

Recently Frozen Plan 7 31

Ongoing Plan 7 31

Cash Balance 7 31

Disclosure