Pension Indicator Updated for February 29, 2016


February 2016: Rising bond prices negate market rebound.

By: Matt Klein, Principal, Findley Davies

February was one of those months where we think the Pension Indicator provides real insight in what is happening and may show a result that could be counter-intuitive to some. The equity markets rallied in the second half of the month and our equity-heavy portfolios drifted close to even for the month. So if you only look at the asset side of the equation, you may anticipate that the Pension Indicator would be flat for the month.

However, if we take a look at the liability side of the equation, that is where the trouble lurks. In February, bonds went up in price. And when bonds go up in price, their yields suffer. It’s been 10 months since we last saw yields this low and the continued decline in funded status for all plans not adopting a LDI strategy can be directly traced to those falling yields.

For plans with a June 30 year-end, it might be time to start doing some planning. Given the negative figures we are showing, it is unlikely that markets recover in time to completely wipe out these deficits. Even if you are not able to pull any levers to fix the underfunding situation, sometimes just knowing what’s coming down the road and avoiding that unpleasant surprise four months down the road is helpful. That’s exactly what this site is dedicated to accomplishing.

In other matters, Findley Davies will host a free webcast on March 22 with the main topic being pension plan de-risking. De-risking is the biggest trend in pensions and 2016 is shaping up to be a record year given how the stars have aligned. Join us for this webcast to understand the reasons why now might be the most optimal time to de-risk, but also other considerations that some sponsors may view as a setback.

Thank you for your interest in our site and let us know of any ways we can make this site more meaningful to your needs.

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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.

July 1, 2015 to Date Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) -11.1% -9.2% -6.5% -2.3%
 Recently Frozen -12.3% -10.3% -7.7% -3.6%
 Ongoing Traditional -13.5% -11.6% -9.0% -4.9%
 Cash Balance -11.5% -9.6% -6.9% -2.7%
Month-over-Month Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) -1.7% -1.4% -0.9% -0.2%
 Recently Frozen -2.3% -2.0% -1.5% -0.9%
 Ongoing Traditional -3.0% -2.7% -2.2% -1.6%
 Cash Balance -1.9% -1.5% -1.0% -0.4%
12-Month Change Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) -4.3%  -2.9% -1.8% 0.2%
 Recently Frozen -2.5% -1.1% 0.0% 2.0%
 Ongoing Traditional -0.5% 0.9% 2.1% 4.1%
 Cash Balance -4.1% -2.7% -1.6% 0.4%