Pension Indicator Updated for February 28, 2022

Staying Under the Radar

By: Matthew R. Klein, Principal, USI Consulting Group

As with most walks of life, but especially as an actuary, I’m at my best when there are no surprises.  My profession tends to be one where we don’t get noticed until something goes wrong, even if it’s beyond our control.  Too often traditional pension plans have had too many surprises for plan sponsors, which is a big reason why defined contribution plans now dominate the retirement landscape.

There is no shortage of news right now- energy prices, Russia’s invasion of Ukraine, workforce shortages- so it's welcome that pension plans are not being a source of news.  Heck, they are downright boring right now as the flatlined charts below illustrate.

Rather, the only thing that might be interesting here is just how uninteresting things are.  If you were just looking at your 401k balance, you are likely down for the year.  While those decreases in bond prices might weigh down what shows up on your asset statement, the higher yields implicit from lower prices act as a great counterbalance on the pension plan balance sheet.  Just in the first two months of this year, we are seeing lower liabilities from 6%-11% depending on duration thanks to a rising yield curve.  This relief is needed as our model portfolios are generally down 5%-8% too.  Only long-duration, open and accruing plans are seeing any meaningful gains thus far in 2022.

We hope for a quick and peaceful resolution to the conflict in Ukraine.

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) -0.1% -0.1% -1.1% -2.5%
 Recently Frozen 2.0% 2.0% 1.0% -0.4%
 Ongoing Traditional 4.2% 4.1% 3.1% 1.7%
 Cash Balance 0.4% 0.3% -0.7% -2.0%
Month-over-Month Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) 0.2% 0.1% -0.3% -1.0%
 Recently Frozen 1.0% 1.0% 0.5% -0.1%
 Ongoing Traditional 1.9% 1.9% 1.4% 0.8%
 Cash Balance 0.3% 0.3% -0.2% -0.8%
12-Month Change Investment Mix 
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) 7.6% 6.1% 3.4% 0.2%
 Recently Frozen 8.2% 6.6% 4.0% 0.8%
 Ongoing Traditional
8.9% 7.3% 4.7% 1.4%
 Cash Balance 7.9% 6.4% 3.8% 0.5%

Frozen Plan 7 31

Recently Frozen Plan 7 31

Ongoing Plan 7 31

Cash Balance 7 31