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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
Compliance
House Committee Approves Bill Aimed at Increasing Retirement Plan Coverage
Among other things, the RISE Act would encourage retirement savings by allowing plan sponsors to offer small financial incentives to motivate employee participation.
Participants
Employees Don’t Want ‘All or Nothing’ When It Comes to Guaranteed Lifetime Income
Eighty-one percent of respondents to a survey indicate they are at least somewhat likely to prefer a retirement plan that substitutes guaranteed income for safe investments such as bonds.
Data and Research
Working Past Age 65 May Seem Like a Great Idea …
… but the prospects may vary, based on education, race and gender, says CRR.
Administration
2021 Best Practices Conference: Benchmarking Investments and Fees
Plan sponsors should consider two necessary elements when benchmarking investments. Meanwhile, whether fees need to be benchmarked depends on how they are paid.
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