Tag: DB plans

LDI Strategies and Preparing DB Plans for Recessions

Speakers on a PGIM Fixed Income webcast offered practical steps pension plan sponsors can take today and over time to protect funding levels; they suggested liability-driven investing is a smart way to “get off the funded-status rollercoaster.”

EBRI Reassesses Whether DC or DB Plans Are Better for Participants

A new EBRI research report compares the outcomes of participants in automatic enrollment 401(k) plans versus defined benefit (DB) plans; when reducing the rate of return assumptions and utilizing current annuity purchase prices, results show that in many cases the automatic enrollment 401(k) plans lose their comparative advantage to the stylized, final-average DB plans.

Study Quantifies How Much DB Plans Benefit the Economy

According to a report from the National Institute of Retirement Security, “Retirees with DB pensions know they are receiving a steady check despite economic conditions. In contrast, retirees may be reluctant to spend out of their 401(k)-type accounts if their savings are negatively impacted by market downturns.”

Art by Mark Wang

DB Plan Glide Paths Should Be Dynamic

When a glide path is established, it needs to be revisited at least once a year to ensure that the goals for the pension plan are achievable.

New Risk Assessment Required for DB Plans

ASOP 51 requires actuaries performing valuations for defined benefit plans to identify risks that, in the actuary’s professional judgment, may reasonably be anticipated to significantly affect the plan’s future financial condition, and Eric Keener, with Aon, says this may help plan sponsors avoid adverse actions.