Pension Indicator Updated for July 31, 2021

August Pension Indicator

By: Brian Hrabak, CFA, Clearstead

The start of the second half of the year proved to be an eventful one for the markets. Domestic equities continued to grind higher, led by large cap growth stocks, amidst exceptionally strong earnings releases. However, international equities generated mixed results as concerns regarding China‚Äôs proposed regulations against education and technology companies weighed on investor sentiment. Equity market returns were mixed for the month with the S&P 500 +2.4%, the MSCI EAFE +0.8% and MSCI Emerging -6.7%1. Within fixed income, further declines in interest rates led to broadly positive returns during the month but were a headwind to funded status improvement. 

After interest rates rose during the first quarter, July was another month where yields declined and the treasury curve flattened. The 10-Year Treasury yield fell 22 basis points to 1.22% during July1. The Bloomberg Barclays Long Govt/Credit Index returned 2.78% for July and -1.99% YTD1. The lower interest rate environment resulted in a liability increase of 1.8%-2.8% for July which was partially offset by asset gains in July of 0.7%-2.0%. The third straight monthly decline in interest rates is another reminder of how quickly markets can change, highlighting the importance of having a de-risking plan in place to lock-in funded status improvements.

Except for fully hedged pension plans, strong year-to-date equity markets have helped boost funded ratios as the S&P 500 Index has returned 18.0% through July1.

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.

1Bloomberg

Year to Date Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
Frozen (for several years) 10.4% 8.1% 5.4% 2.2%
 Recently Frozen 11.0% 8.7% 6.0% 2.7%
 Ongoing Traditional 11.7% 9.4% 6.6% 3.4%
 Cash Balance 10.6% 8.3% 5.6% 2.4%
Month-over-Month Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) -1.1% -0.8% -0.4% 0.2%
 Recently Frozen -1.6% -1.3% -0.9% -0.4%
 Ongoing Traditional -2.2% -1.9% -1.5% -0.9%
 Cash Balance -1.2% -0.9% -0.5% 0.1%
12-Month Change Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) 25.1% 19.6% 13.6% 5.8%
 Recently Frozen 26.9% 21.4% 15.3% 7.4%
 Ongoing Traditional
28.9% 23.3% 17.1% 9.1%
 Cash Balance 25.6% 20.2% 14.1% 6.3%


Frozen Plan 7 31

Recently Frozen Plan 7 31

Ongoing Plan 7 31

Cash Balance 7 31

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