The funded status of the model pension plan examined by Sibson Consulting and Segal Marco Advisors rose by 2 percentage points to 95 percent in the third quarter of 2018, as illustrated by the red line in the graph below. The funding increase is a result of a 3 percent asset return offset by a 1 percent increase in liabilities, and marks the fourth consecutive quarter during which the plan’s funded status increased.
“Domestic stocks were the strongest performers, with U.S. stocks outperforming both developed international stocks and emerging market stocks. Internationally, developed international outperformed emerging markets for the quarter,” said David Palmerino, vice president with Segal Marco Advisors. “These aspects contributed to the 0.05 percent gain in asset value.”
National Retirement Practice Leader Stewart Lawrence suggests that plan sponsors examine changes in their own defined benefit plans for both accounting and funding metrics: “Any change in either the shape or level of the yield curve, could have a different impact on liabilities for plans with different maturities,” he noted.
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 Erin Burns.
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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, human capital management and change management consulting.
Segal Marco Advisors (www.segalmarco.com), another 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.
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