Pension Indicator
Pension Indicator Updated for February 28, 2023
The One Where We Don't Talk About SECURE 2.0
By: Matthew R. Klein, Vice President & Senior Consulting Actuary, USICG
I feel like if you are in the retirement space every article that has been written the past two months has been about the impacts and to-dos of SECURE 2.0 passing at the very end of 2022. There are innumerable resources out there to help you with that, so we won’t make yet another attempt here.
Instead, if you want to be thinking about an idea, I very well could see the niche project for 2023 to be the return of lump sum buyout offerings. Most commonly, we see plan sponsors offer these to their terminated-but-not-in-receipt participants. In lieu of the monthly benefit someone is promised at normal retirement, a lump sum is offered, allowing the participant to roll their pension into an IRA (or as cash) to continue to grow with participant control.
With the historically low interest rates and plenty of other distractions since COVID, these programs dried up. However, with rising interest rates making these offers more affordable for plan sponsors, and sponsors having not done one of these programs in years (if ever), this is the time to contemplate such an action with plenty of time to execute it during 2023 still. Reach out to us if you have any specific questions for your unique situation.
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 (Net) | ||||
|---|---|---|---|---|
| Plan Type | Growth | Balanced | LDI Lite | LDI |
| Frozen (for several years) | 2.8% | 2.4% | 2.1% | 1.5% |
| Recently Frozen | 2.6% | 2.2% | 1.9% | 1.3% |
| Ongoing Traditional | 2.4% | 2.0% | 1.7% | 1.1% |
| Cash Balance | 2.8% | 2.4% | 2.1% | 1.6% |
| Month-over-Month Investment Mix (Net) | ||||
| Plan Type | Growth | Balanced | LDI Lite | LDI |
| Frozen (for several years) | 1.0% | 0.7% | -0.1% | -1.2% |
| Recently Frozen | 1.9% | 1.6% | 0.8% | -0.3% |
| Ongoing Traditional | 3.0% | 2.7% | 1.9% | 0.8% |
| Cash Balance | 1.3% | 1.0% | 0.2% | -0.9% |
| 12-Month Change Investment Mix (Net) | ||||
| Plan Type | Growth | Balanced | LDI Lite | LDI |
| Frozen (for several years) | 8.6% | 6.3% | 2.5% | -1.6% |
| Recently Frozen | 12.8% | 10.4% | 6.5% | 2.2% |
| Ongoing Traditional |
17.1% | 14.6% | 10.6% | 6.1% |
| Cash Balance | 9.7% | 7.4% | 3.6% | -0.6% |
Please click on the "Historical" tab at the top of the website for longer time periods, including Five-Year and Return Since Inception (1/1/2016).
USI Consulting Group (USICG) has been delivering retirement consulting and administration services to organizations and their participants for over 40 years. We offer innovative solutions to mitigate risk, stay compliant and protect plan sponsors and fiduciaries with deep commitment to client satisfaction and delivering superior results.
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