NEW YORK--(BUSINESS WIRE)--The funded status of the model pension plan examined by Sibson Consulting and Segal Marco Advisors rose by 5 percentage points to 89 percent in the first quarter of 2018, as illustrated in the graph below.
The funding increase was due to a 1 percent rise in asset value combined with a substantial 5 percent decrease in liabilities, resulting from an increase in high-quality corporate yields.
“Domestic stocks started the year positively in February and March, but were negative performers. Equity asset classes lost ground for the quarter, while global bonds performed well. Emerging markets were the only equity sector that contributed positive performance,” said David Palmerino, vice president with Segal Marco Advisors. “The Fed also again increased the target range for the Federal Funds Rate to 1.5 to 1.75 percent, in a move that was largely telegraphed and had no dramatic impact on bond prices. These aspects contributed to the 1 percent gain in asset value.”
“As plan sponsors reconsider their strategies and tactics for 2018, this might be an appropriate time to raise the issue of examining the plan’s evolving risk-mitigation strategy,” National Retirement Practice Leader Stewart Lawrence added.
To speak with one of our consultants about the model plan, and how it may inform decision-making for employers that have a pension plan, please contact me.
Segal Marco Advisors (www.segalmarco.com), a member of The Segal Group, provides innovative, client-driven consulting advice, outsourcing solutions, proxy voting and corporate governance. Clients include joint boards of trustees administering benefit plans under the Taft-Hartley Act, state and local governments, corporations, non-profit organizations, endowments and foundations. The firm works with financial services firms through Rogerscasey, a Division of Segal Advisors, and with Canadian clients through Segal Rogerscasey Canada.
Sibson Consulting (www.sibson.com), another member of The Segal Group, provides strategic human resources solutions to corporate and non-profit employers and professional service firms. Sibson's services include benefits, compensation, human capital management and change management consulting.