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The Choice is Yours - April 2017

04.26.2017

books on a library shelf

As we saw in our last piece, "The Electric Glide," the amount of underfunding of many corporate pension plans (i.e., 81.5% funding level per Milliman 100 Pension Funding Index) has reached a point where many pension investment committees will freely admit that they can’t solve their plan’s deficit problem on their own, even with cooperative financial markets. They are frustrated that even after generating strong investment returns over the past five years, their longer-term immunizing goal remains elusive and that their funded ratios have barely budged. As we highlighted, periodic benefit payments are the funded-ratio silent killer for most under-funded plans, elevating the required hurdle rate for plan assets.

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