April 10, 2014
There’s a new word being used in the context of frozen pension plans: hibernation. My colleague Jim Gannon has written recently on what it is and how hibernation compares to termination.
April 7, 2014
Unless you live under a rock, you now know that HFT stands for High Frequency Trading. Michael Lewis’ new book Flash Boys: A Wall Street Revolt can be loosely summarized as “HFT is evil.” He describes, for example, how some traders systematically exploit the milliseconds of difference in the time it takes signals to reach
April 3, 2014
The Society of Actuaries recently released a draft version of new mortality tables for pension plans, with the catchy title RP-2014. My colleague Justin Owens has described how these new tables will affect defined benefit plans in various ways: from lower funded status to higher contributions to possible implications for investment strategy. Current indications are that the IRS will mandate the use of the new table for funding purposes from 2016 or thereabouts. Many plan sponsors will probably start using the new tables for accounting purposes by the end of this year.
March 26, 2014
Investment committees play a key role in the deployment of the $18 trillion¹ or so of institutional assets in the U.S. More often than not, it is an investment committee that establishes strategy, oversees critical asset allocation decisions and selects the people who take day-to-day responsibility for running the money. But how effective are investment
March 20, 2014
Like the proverbial actuary with his feet in the oven and his head in the fridge (“on average, I’m just right”), it’s easy for investors to make too simple an assessment of the world. Often, it’s not the average that really matters, but the range of possible outcomes. Averages can sometimes disguise the most important
March 10, 2014
The idea that pension plan asset allocation should be tied to funded status is surprisingly young. It was not common practice before 2008: when Jim Gannon and I wrote our paper on liability-responsive asset allocation in April, 2009, it was (as far as we are aware) the first time this approach was formally described in any detail.
March 3, 2014
On February 28, UPS and Pfizer filed their 10-K annual reports with the SEC, the last of the $20 billion club to do so. The $20 billion club is our name for 19 of the U.S.-listed corporations with the largest defined benefit pension plans: each of them has around $20 billion or more in worldwide pension liabilities. They are the bellwethers of the U.S. defined benefit plan sponsor community.