Pension Indicator Updated for May 31, 2017

June 2017: In ERISA we Trust

By: Mike Shebak, Senior Managing Director, Hartland

Employees of religious affiliated hospitals, schools or social service entities may no longer have their pension protected by federal ERISA laws.

As you know, ERISA provides significant protectiosn for employees' pensions.  What you may not be aware of is that the law includes an exemption for a "church plan", or a plan for what is defined as a "principal purpose organization."

In a recent case, the U.S. Supreme Court ruled unanimously that a pension can be considered a “church plan” even if the organization sponsoring the plan was not founded as a religious organization.  In the case at hand, a large health care plan was deemed to be a church plan after the sponsoring entity created ties to a church.

The significance of this is that under the church plan status, certain ERISA protections such as funding requirements and PBGC guarantees, are eliminated.

While we would expect plan sponsors in such circumstances to continue governing the plan in good faith and follow fiduciary best practices, this is certainly an interesting development.


Plan funded statuses improved slightly in the month on the heels of positive asset returns and unchanged interest rates.

U.S. equity markets continued their momentum with the broad market cap weighted indices producing gains in May which was driven by large caps. The S&P 500 returned 1.4% whereas the Russell 2000 declined 2.0%.

International equity markets continued their strong advance, particularly after France’s election.  Foreign developed equity markets as represented by the MSCI EAFE Index returned 3.8% in May while the MSCI Emerging Markets Index returned 3.0%.

After a large move during the second half of 2016, yields have been largely range bound in 2017. The U.S. Treasury yield curve flattened during the month with the short-end moving up as anticipated future rate hikes put pressure on the short-end while the long-end moved down slightly. The 10-year U.S. Treasury yield closed May at 2.20% down 8 basis points from April1. The BarCap Aggregate Index total return for April was +0.77% and +2.38% year-to-date.

As always, thanks for reading, and drop us a comment on how we're doing.

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The opinions expressed are that of the author and not necessarily those of Findley Davies or Hartland.

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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 TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) 2.6% 2.1% 2.1% 1.4%
 Recently Frozen 1.7% 1.2% 1.1% 0.4%
 Ongoing Traditional 0.7% 0.2% 0.1% -0.5%
 Cash Balance 2.3% 1.8% 1.8% 1.1%
Month-over-Month Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) -0.2% -0.1% 0.2% 0.5%
 Recently Frozen -0.7% -0.6% -0.3% 0.0%
 Ongoing Traditional -1.3% -1.2% -0.9% -0.6%
 Cash Balance -0.3% -0.2% -0.1% 0.4%
12-Month Change Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) 13.3% 11.4% 9.8% 7.1%
 Recently Frozen 13.3% 11.4% 9.8% 7.1%
 Ongoing Traditional 13.2% 11.3% 9.7% 7.0%
 Cash Balance 13.4%


9.9% 7.2%