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week ending February 14th, 2020
Despite strong equity returns during 2019, most defined benefit (DB) plan sponsors likely saw only a small improvement to their plan’s funded status over the year. Plenty of DB plans remain open and add new layers to their benefit liabilities each year. Accordingly, sponsors continue their contributions and need portfolio destinations offering growth through risk in the markets. Many are suggesting that growth can come from investments in certain alternative investments. In addition, studies have shown DB plans could benefit from not being too strict about target allocations. In this edition of PLANSPONSOR Weekend, plan sponsors can find suggestions about how to invest to improve returns and, potentially, funded status.
Editor's Choice
Administration
Most DB Plans Saw Little Funded Improvement in 2019
Plan sponsors will need to consider whether in 2020, as in 2019, stock market returns will be great enough to offset rising liabilities from interest rate decreases.
Investing
What DB Plans Can Learn From Insurance Companies
Insurance companies take on pension risk, so why wouldn’t DB plan sponsors take lessons from insurer’s investment strategies?
Investing
DB Plan Sponsors Turn to Private Markets for Return
It is critical to choose the right investments and managers.
Investing
Alternative Assets Can Help With Derisking DB Plans
A Cerulli Associates report explains how different alternative investments can help a derisking defined benefit (DB) plan with liability hedging as well as risk-seeking.
Investing
DB Plans Can Afford to Loosen Up on Target Allocations
Two separate reports suggest that public pension plans’ strict adherence to target allocations and corporate pension plans’ focus on bonds and de-risking their portfolios may be hindering potential performance.
Popular Reads
Opinions
Democrats Take Control of the Senate: What Does That Mean for Your Retirement Plan?
Syed Nishat, with Wall Street Alliance Group, discusses potential effects on retirement plans if President Joe Biden is able to move forward his legislative agenda.
2020 Recordkeeping Survey
Compliance
Takeda Pharmaceuticals Faces ERISA Lawsuit Over TDF Suite in 401(k) Plan
The lawsuit says the target-date funds were selected for the plan despite having no performance history and, when they continued to underperform, they were not replaced with better options.
Data and Research
Pandemic Puts More Households at Risk in Retirement
The Center for Retirement Research says half of American households are at risk of not being able to live at pre-retirement standards of living in retirement.
Compliance
Trustee Sued Over Retirement Plan Account Fraud
The lawsuit claims the trustee allowed an unauthorized person to take a distribution from a participant’s account and that the trustee is refusing to provide information to help remedy the situation.
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