Pension Indicator Updated for August 31, 2017

Look at the whole picture

By: Matthew Klein, Principal, Findley Davies, Inc.

When we launched the Pension IndicatorTM (seven years ago!) one of the main drivers in doing so was that far too often we found plan sponsors looking only at investment performance and judging the health of pension plan funding levels based on that.  I think it’s fair to say through education both by consultants and through the school of hard knocks at times during the past seven years, plan sponsors are more educated and have a better understanding of the role bond yields play into the equation.

This is relevant when looking at what has happened thus far in 2017.  If you only looked at investment performance, all four of our investment benchmark portfolios are up between 9% and 10% for the year. And without context, one might think things are looking great for year-end.  However, U.S bond yields have continued to fall during 2017 after what in hindsight was a short term bump in rates in the couple months following the presidential election.

The news here isn’t bad- most plan sponsors will be satisfied with not losing ground.  The lesson is to be aware that the U.S stock markets setting  new highs may not necessarily be great news for the pension plan.

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 TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) 3.0% 2.5% 2.9% 2.6%
 Recently Frozen 1.3% 0.8% 1.1% 0.8%
 Ongoing Traditional -0.5% -1.0% -0.7% -1.0%
 Cash Balance 2.6% 2.1% 2.4% 2.1%
Month-over-Month Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) -0.8% -0.5% -0.1% 0.2%
 Recently Frozen -1.2% -0.9% -0.5% -0.1%
 Ongoing Traditional -1.6% -1.3% -0.9% -0.5%
 Cash Balance -0.9% -0.6% -0.3% 0.1%
12-Month Change Investment Mix 
Plan TypeAggressiveBalancedLDI LiteLDI
 Frozen (for several years) 14.9% 12.6% 10.4% 7.0%
 Recently Frozen 16.0% 13.7% 11.5% 8.0%
 Ongoing Traditional


14.8% 12.6% 9.1%
 Cash Balance 15.3%


10.8% 7.3%