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.
February 24, 2014
It’s reporting season for most big corporations, and we’ll be issuing the latest update on the $20 billion club just as soon the final 10-K report is available. Meanwhile, as I plough through all the reporting to pull the numbers together, it’s been a stark reminder of the sponsor’s perspective on the difference between defined benefit (DB) and defined contribution (DC).
February 18, 2014
Question: when a market is stressed, do you expect its subsequent behavior to be more volatile than normal, or less volatile, or the same? And is your return expectation higher, lower, or the same?
February 10, 2014
A brief follow-up from my recent blog about the MyRA program, which was announced last month in President Obama’s State of the Union address. In the announcement, the President made the remarkable claim that this program would invest in a way which “guarantees a decent return with no risk of losing what you put in”. Which seems too good to be true. But, on closer inspection (and depending on how you interpret “decent”), it’s for real: even though the title of this blog reads like a bad internet ad, there really is an investment vehicle which pays investors a risk premium without requiring them to take any risk.
January 29, 2014
In his State of the Union address yesterday, President Obama announced that he will today be directing the Treasury to issue MyRA bonds (pronounced “My R. A.”). This is a savings bond that “guarantees a decent return with no risk of losing what you put in.”
January 28, 2014
I’ve been a little slow getting to this, but our strategist team issued their 2014 outlook earlier this month. They see 2014 as a “year of validation”. By which they mean that most equity markets rallied strongly in 2013 on the back of growing optimism about the economy and a perception of diminished risk of recession, but we’ll learn more in 2014 about whether that optimism was justified or not. So we’ve already had the market move in anticipation of good news, the question now is whether events turn out as expected.