September 2024
11Sep

US. As Pension Funding Levels Fell in 2022, Higher Contributions Helped States Manage Debt

From fiscal year 2021 to 2022, the reported funding gap for state pension plans—the disparity between promised benefits and available assets—jumped by $439 billion to $1.27 trillion. The increase, largely fueled by investment losses, highlights how volatile financial markets continue to expose state and local governments to risk. Yet, despite poor investment returns, in 2022, 49 states still contributed enough to their pension plans to meet a key target, the net amortization benchmark, which measures whether employers’ payments are sufficient...

September 11, 2024
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August 2024
01Aug

Funding ratios of German corporate schemes hit unprecedented level

The funding ratios of pension schemes of German companies listed on the DAX and MDAX indices have climbed to an unprecedented level in the first half of this year, according to the latest Pension Finance Watch published by WTW. The funding ratio of pension plans of the largest firms listed on the DAX index improved to 84% in H1 2024, up from 79.1% at the end of 2023, WTW’s figures show. The funding ratio of pension plans of companies listed on...

August 1, 2024
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July 2024
17Jul

US. Rallying Stock Market May Help Public Pensions Reduce Shortfall This Year, Study Finds

KEY TAKEAWAYS State and local government-sponsored employer pension funds are projected to earn a 7.4% market return this year. However, these pension funds still face a long-run funding shortfall of more than $1 trillion, according to a new study by a nonprofit think tank working with the public retirement system. Public pension funds have increased their investments in hedge funds, private capital, and real estate to boost returns. It’s been a good year for pension funds. While public pension funds...

July 17, 2024
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17Jul

UK. The new Labour Government and pensions: the employer perspective

The Pensions & Lifetime Savings team here at Burges Salmon has been closely following the UK’s general election and recently posted this passle on what the pension industry should expect from the new Labour Government. But what are the particular implications for Employers? Ahead of tomorrow’s Kings Speech, which we hope will offer greater clarity on the new Government’s immediate pensions priorities, here are some thoughts on key topics that Employers should be looking out for: The DB Funding Code Scheme funding is of course...

July 17, 2024
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June 2024
27Jun

UK. DB schemes taking steps to manage risks as funding positions improve

Defined benefit (DB) pension schemes have taken advantage of last year’s “relative calm” to make progress on endgame planning, net-zero targets, and tackling diversity, equity and inclusion (DE&I) issues, research from LCP has revealed. LCP’s latest Chart Your Own Course report found that many schemes have seen improvements to their funding positions and are exploring various endgame options. In particular, LCP found that completing a de-risking transaction remained a top priority for many, cited as a key priority in the coming year...

June 27, 2024
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25Jun

Spain Goes Into Debt To Fill The Pension Pot

Can you imagine taking out a loan to open a bank deposit? Well, that is what Spain is doing to fill the pension fund with 7 billion. Last year, the pension system needed to borrow 50 billion from the state to meet pension payments. This 50 billion shortfall is exactly 3.6% of GDP. And it is exactly the figure for the Spanish public deficit in 2023. But that is no obstacle for the Government to have decided to endow the...

June 25, 2024
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21Jun

Russia. Putin suggests using oil windfall for pensions

Russia's President Vladimir Putin suggested on Thursday to use a part of the accumulated oil wealth to support voluntary pensions saving and capitalise development institutions. "Part of the money in the National Prosperity Fund should be used to co-finance voluntary pension savings," Putin said in his annual address to both houses of parliament. Putin suggested the state should contribute 1,000 roubles for each 1,000 roubles contributed by private individuals in voluntary pension savings schemes. "Part of the money should be used for...

June 21, 2024
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18Jun

US. Public pension funding ratios roar back in May — Milliman

The overall estimated funding ratio of the 100 largest U.S. public pension plans bounced back in May thanks to strong investment returns for the month, according to the Milliman 100 Public Pension Funding index. The increase in the funding ratio to 79.4% as of May 31 from the estimate of 77.6% as of April 30 was primarily the result of positive market performance in May, almost completely reversing a weak April for investment returns. The estimated funding ratio at the...

June 18, 2024
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12Jun

Funded Status of U.S. Corporate Pension Plans Continues to Improve in May

In May, the financial health of U.S. corporate pension plans experienced a marked improvement, continuing a positive trend seen over the past five months, according to a round-up of the country’s pension watchers. The main reasons for the positive funding trends in May across various corporate defined benefit plans included positive economic indicators, strategic investment approaches such as cash-flow-driven strategies and resilience in market performance despite lower interest rates. “May’s improvement is the fifth month in a row of funded ratio...

June 12, 2024
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10Jun

US. Ways to leverage a pension plan surplus

A robust equity market coupled with the strong fixed-income returns that followed the sharp rise in interest rates have restored corporate pension plans to full-funded status, with many enjoying a surplus. This welcome development has sparked conversations by plan sponsors exploring paths for their excess pension assets, from bolstering retirement benefits to addressing corporate financial needs or supporting other business initiatives. “The pension environment has changed significantly since pensions were last overfunded, and these changes present opportunities to plan sponsors...

June 10, 2024
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