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May 2024

10May

US. Public Retirement Systems Need Policies for Navigating Volatile Financial Markets

Over the past decade, policy reforms and increased financial contributions have dramatically improved the cash flow situation of some of the nation’s most troubled state pension plans. Thanks to these changes, no state was at risk of pension insolvency as of fiscal year 2021. Yet for some states, these improvements won’t be enough to provide their pension systems—and the public employees and retirees who rely on them—with long-term stability. In 2021, once-in-a-generation investment returns raised state pension funding to levels...

May 10, 2024
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09May

US. Corporate pension funding surpluses remain high in April – 3 reports

U.S. corporate pension fund surpluses remained high in April despite negative market returns for the month, according to three new reports. Wilshire Advisors estimated the aggregate funding ratio of U.S. corporate plans reached 110.8% as of April 30, an increase of 1.1 percentage points above the 109.7% funding ratio estimated as of March 31. "April’s funded status increase resulted from the increase in Treasury yields, which led to the largest monthly decline in liability values since September 2022. Corporate bond yields,...

May 9, 2024
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07May

The US prison system is turning into a de facto nursing home

In late 2018, Richard Washington sent a memo to the US Court of Appeals for the Ninth Circuit with the subject line “Notice I am being killed.” The 64-year-old man, who decades earlier was convicted on armed robbery charges, was serving a 63-year prison sentence in Arizona. In his letter, he alleged that the Department of Corrections was refusing to give him medication for his various health issues, which included diabetes, hypertension, and hepatitis C. Because of the lack of...

May 7, 2024
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06May

US. Prudential Survey Reveals Insights on Retirement Planning

Prudential conducted a survey of 198 financial advisors to gain insight on how they are investing and constructing portfolios for retirees. 80% use separate portfolios that are specifically designed for retirees. Additionally, the use of targeted portfolios was higher among advisors who were more knowledgeable about planning for retirement. Another takeaway from the survey is that 50% of retirees prefer to live off of income from their portfolios. Thus, advisors need to ensure that their portfolios generate income for clients while balancing...

May 6, 2024
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03May

Financial Fragility, Financial Resilience, and Pension Distributions

By Robert Clark & Olivia S. Mitchell  We evaluate Americans’ financial robustness during the COVID-19 pandemic, using measures of financial resilience and financial fragility derived from U.S. surveys of persons aged 45 to 75 from 2020 to 2022. We analyze which factors were associated with resilience and fragility, discuss how these measures changed during the pandemic, and assess whether prepandemic resilience led to better outcomes during the period. Results show that stronger resilience was protective in terms of financial fragility,...

May 3, 2024
Articles, Pension design, , , ,
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03May

The ‘father of the 401(k)’ talks about the death of pensions, the future of retirement, and what disturbs him about his own creation

Americans have a lot of anxiety around retirement. Many people are dipping into their nest eggs to make ends meet amid soaring inflation, some boomers aren’t prepared to leave the workforce as they enter their golden years, and people are increasingly working past the typical retirement age. The most popular method for workers to save for retirement is the 401(k), which allows employees without employer-backed pensions to independently contribute to their own retirement savings, often with employer matching. But it’s not right for everyone, and the man who...

May 3, 2024
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02May

US. The Longevity Question

In his annual letter, BlackRock CEO Larry Fink stressed the need to find solutions to the concerns Americans face when they plan for retirement. “We focus a tremendous amount of energy on helping people live longer lives. But not even a fraction of that effort is spent helping people afford those extra years,” Fink wrote. Most public pension funds in the U.S. are underfunded, according to research from the Equable Institute, which released a  State of Pensions 2023 report that...

May 2, 2024
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April 2024

29Apr

25% of Americans over 50 don’t expect to retire. How to start saving

About a quarter of Americans above the age of 50 say they expect to never retire as the cost of living rises faster than their income, according to a new AARP study. Certified financial planner Shinobu Hindert joined NewsNation’s “Morning in America” with tips on how to plan for retirement amid rising prices. Hindert says when planning for retirement, a person should ideally have the equivalent of one year’s salary saved by the time they are 30, three times their annual salary...

April 29, 2024
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26Apr

Economic Consequences of Pension Bailouts: Evidence from the American Rescue Plan

By Michael Dambra, Phillip J. Quinn & John Wertz Multiemployer pension plans (MEPPs) provide retirement benefits for 11 million participants, yet until recently, hundreds of these pension plans – covering 3 million participants – faced insolvency. We use the 2021 passage of the American Rescue Plan Act to examine how pension bailouts affect the management and administration of pension plans. Consistent with the ARP inducing moral hazard, we find that MEPPs increase risk taking in investment allocations, increase benefit payments,...

April 26, 2024
Articles, System Sustainability, , , ,
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26Apr

2024 Corporate Pension Funding Study

By Zorast Wadia & Alan Perry The 2024 edition of the Milliman Corporate Pension Funding Study (PFS) is our 24th annual analysis of the financial disclosures of the 100 U.S. public companies sponsoring the largest defined benefit (DB) pension plans. These 100 companies are ranked highest to lowest by the value of their pension assets as of the end of fiscal year (FY) 2023. These values have been reported to the public, to shareholders, and to the U.S. federal agencies...

April 26, 2024
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