Pension Indicator Updated for January 31, 2024

New Year - Adapting to Change

By: Brian Wunderle, Managing Director, Clearstead

Freezing temperatures have set in, but pension plans remain hot to start the year. Funding has improved, risk transfers continue at a historic pace, and the surprising news that IBM will reinstate pension benefits has brought fresh enthusiasm to an often-overlooked segment of the retirement space. Sponsors should utilize this attention to review Plan status, discuss strategic initiatives, and implement actionable items to adapt in this new environment.

In January, equity markets climbed to record highs amid resilient economic growth and the expectation that the Federal Reserve will soon begin interest rate cuts. Investors project a “soft landing” scenario which has supported market sentiment and propelled the “Magnificent Seven” technology stocks. The S&P 500 returned +1.7%, while developed international equities (MSCI EAFE) was flat to slightly negative. 

Strong equity performance and a rebound in interest rates benefited Plan funded status. Corporate bond yields increased slightly, dampening liability values. The aggregate GAAP funded status of S&P 500 pension plans improved approximately 1% from the prior month. This improvement brought the average Plan funded status to 107%1.

Many companies will soon disclose 2023 pension results through 10-k filings. Substantial funded status gains are expected, which creates an inflection point. Plan sponsors should evaluate appropriate steps to protect and preserve their Plan. Clearstead encourages all sponsors to evaluate the critical items below following this period of strong funding levels:

1) Interest rate risk management – Introduce or reassess custom long-duration fixed income mandates to minimize uncompensated pension risk.

2) Strategic hibernation portfolios – Primary goal of minimizing surplus risk for a target level of surplus return.

3) Pension surplus opportunities – Define objectives of increasing surplus (fund retiree healthcare, facilitate pension risk transfer, pay future benefit accruals, etc.)

Change may often be uncomfortable, but it is needed in times of dynamic shifts. Sponsors who can adapt during this period will be paramount to constructing an appropriate end-state pension portfolio and achieving objectives.

Clearstead and USI provide advisory solutions to countless Sponsors and can lead the process to navigate these critical items. Please contact us for more information on the latest research, trends, and advisory solutions for our retirement plan sponsors.

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

This email address is being protected from spambots. You need JavaScript enabled to view it. or Clearstead to discuss this information further.

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 indicative of future results.

1Company filings, press releases, MSCI, Bloomberg, and Clearstead.

Year to Date Investment Mix (Net)
Plan TypeGrowthBalancedLDI LiteLDI
Frozen (for several years) 1.0% 0.9% 0.7% 0.3%
 Recently Frozen 1.7% 1.6% 1.4% 1.0%
 Ongoing Traditional 2.5% 2.4% 2.2% 1.8%
 Cash Balance 1.2% 1.1% 0.8% 0.5%
Month-over-Month Investment Mix (Net)
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) 1.0% 0.9% 0.7% 0.3%
 Recently Frozen 1.7% 1.6% 1.4% 1.0%
 Ongoing Traditional 2.5% 2.4% 2.2% 1.8%
 Cash Balance 1.2% 1.1% 0.8% 0.5%
12-Month Change Investment Mix (Net)
Plan TypeGrowthBalancedLDI LiteLDI
 Frozen (for several years) 11.4% 9.8% 8.1% 5.8%
 Recently Frozen 12.6% 11.0% 9.4% 7.0%
 Ongoing Traditional
14.0% 12.4% 10.8% 8.4%
 Cash Balance 11.7% 10.1% 8.5% 6.2%

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).

Frozen Plan 7 31

Recently Frozen Plan 7 31

Ongoing Plan 7 31

Cash Balance 7 31




 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.



Clearstead Logo

 Clearstead is an independent financial advisory firm serving wealthy families and leading institutions across the country. As a fiduciary, it provides wealth management services and investment consulting to enable clients to meet their financial objectives, achieve their aspirations, and build strong futures.