Pension Indicator Updated for December 31, 2015

Happy New Year!

As we close 2015, perhaps the theme for the year should be “no news is good news.” Most plan sponsors will view a draw as a win. It’s when they lose that pension plans get a bad reputation. As you peruse the graphs, you will see that everything this year finished pretty close to 0%, meaning that plans ended the year in pretty much the same funding situation as they started the year.

On the equity side, the S&P had a positive return only if you include dividends. Regardless of your exact asset mix, it is highly likely that returns fell short of expectations. This will cause a loss for plans.

However, this will be offset by some gains on the liability side. Discount rates will be increasing by 25-50 basis points which will save a few percent. Not reflected in the figures here, but for plans that adopted the new Society of Actuaries’ mortality tables last year, chances are you will be updating them yet again this year for the revision issued in 2015, saving another couple percent.

As we look forward to 2016, we will continue to have many stressors. The downturn in the stock market during the beginning of 2016 shows the impact of foreign markets. Oil prices and the presidential election are two of the other known issues that will play heavily into the markets, along with various unknown factors that will be uncovered through the year.

We hope that 2016 will be the best year yet for you and your families.

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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 indicate of future results.

Calendar Year-to-Date Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) -1.5% -1.6% -1.9% -1.5%
 Recently Frozen 0.0% -0.1% 0.6% 0.0%
 Ongoing Traditional 1.8% 1.7% 2.5% 1.9%
 Cash Balance -1.3% -1.4% -0.8% -1.3%
Month-over-Month Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) -1.3% -1.2% -1.0% -0.6%
 Recently Frozen -1.3% -1.2% -1.0% -0.6%
 Ongoing Traditional -1.3% -1.2% -1.0% -0.7%
 Cash Balance -1.3% -1.2% -1.0% -0.6%