NEW YORK--(BUSINESS WIRE)--During the second quarter of 2015, the funded status of the model pension plan examined in Sibson Consulting and Segal Rogerscasey’s publication, Prism, increased by 8 percentage points: from 79 percent to 87 percent. This increase was the result of an increase in the effective interest rate and, consequentially, a 10 percent liability decrease, coupled with flat investment performance during the quarter.
“The significant increase in funded status caused by rising interest rates demonstrates the typical plan’s exposure to the uncompensated risk of interest rate movements,” noted Stewart Lawrence, Retirement Practice Leader. He added, “As plan sponsors look towards 2016, this might be an appropriate time to raise the issue of considering changes in the plan’s risk-mitigation strategy.”
The flat investment performance during the quarter was in part a result of heightened uncertainty due to the worsening debt crisis in Greece, and heightened concerns over slowing growth in China.
To read the issue of Prism, which includes three graphs, please click here.