New York (7/26/16) — Pension liability growth outpaced asset growth threefold last quarter, leading the pension plan examined in Sibson Consulting and Segal Rogerscasey publication, Prism, to a new funding low for 2016.
The funding percentage of the model plan dropped 3 percentage points in the second quarter, from 79 percent to 76 percent. Assets increased just 2 percent from the first quarter, while liabilities went up by 6 percent. Investment performance was positive overall, with domestic stocks outperforming developed international and emerging market stocks. Developed international stocks performed particularly poorly following the United Kingdom’s decision to leave the European Union.
“Back-to-back plunges in pension funding levels this year highlight the ongoing need for plan sponsors to examine their risk-mitigation strategies,” noted Stewart Lawrence, National Retirement Practice Leader. “As interest rates plummet to new lows in the U.S., Europe and Japan, a thorough review of plans assets, liabilities and funded ratios is needed from the perspective of both accounting and funding metrics.”
To speak with Mr. Lawrence about the findings of this report, and how it may inform plan sponsors’ decision-making, contact Todd Kohlhepp.
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Sibson Consulting (www.sibson.com), a 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, talent and performance management, communications, sales force effectiveness and change management.