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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
Supreme Court Decision in Thole v. U.S. Bank Has Major Implications for Pensions
The ruling effectively establishes that individual pension plan participants cannot sue their employer for a fiduciary breach if their own benefit has not been cut or otherwise altered.
Compliance
Heroes Act Now In the Hands of a Skeptical Senate
The Heroes Act, passed by a narrow majority in the House, includes union pension partition relief and a waiver for the reinvestment of 2019 and 2020 RMDs.
Compliance
Court Finds Plan Sponsor Could Be Found Liable for Retirement Plan Cyberfraud
The plan sponsor had sued plan providers, but the providers in a counterclaim said the plan sponsor was equally liable.
Compliance
Plan Sponsor, Provider Sued for Adding Untested CITs to 401(k)
The 92-page complaint includes a number of other allegations, including that the plan sponsor was motivated by its relationship with the provider for its defined benefit plans.
Products
BlackRock Creates Retirement Paycheck
Two insurers have joined the effort to make lifetime income available in a simplified manner.
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