Products May 6, 2015

Penbridge Launches PRT Index Charting Tool

A new tool from Penbridge seeks to enhance plan sponsor understanding of pension annuity buyout pricing.
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Penbridge Advisors announced the release of an advanced pension risk transfer (PRT) index charting tool that improves plan sponsor and adviser understanding of annuity buy-out pricing and other elements of PRT transactions.

The Penbridge PRT Index represents the premium that an insurance provider would charge for a buy-out of a “typical” defined benefit (DB) pension plan, the firm explains. The index tool is driven by the Penbridge PRT Database, and it can break down PRT pricing information on both a liability value basis and an effective interest rate basis. The information can be easily compared to various important measures, the firm explains, “such as PPA [Pension Protection Act], lump sum, accounting, and Treasury bases.”

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The Penbridge PRT Database is currently used by more than 300 plan sponsors and advisory firms, according to the firm, and is one of the only online databases offering comprehensive information and research tools on the U.S. defined benefit PRT market.

Last year, Penbridge Advisors and P-Solve formed a strategic alliance to allow sponsor of defined benefit plans to integrate PRT information and advice within a fiduciary asset management offering.

More information about the index tool is at www.penbridgeadvisors.com/join.

Investing May 6, 2015

Greater Diversification Improves Plan Returns

The Wilshire Trust Universe Comparison Service found all plan types’ median returns were higher in Q1 2015 than returns generated by the classic 60/40 portfolio.
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Institutional assets tracked by the Wilshire Trust Universe Comparison Service (Wilshire TUCS), saw a median return of 2.13% in the first quarter.

“What’s noteworthy for this quarter is that all plan type median returns were higher than the 1.61% return for the classic 60/40 portfolio, which demonstrates that diversification into other asset classes like international equity and real estate paid off for the quarter,” says Robert J. Waid, managing director at Wilshire Associates. “It is not surprising that large plans outperformed smaller plans in the first quarter due to less exposure to U.S. equities and more to international equities. All plan types with assets greater than $1 billion had median returns of 2.31% and 7.15% for the quarter and year, respectively.”

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According to the Wilshire data, corporate pension funds, overall, had a median return of 2.29% for the first quarter of 2015. The median allocation for these funds was 32.77% to U.S. equity, 8.47% to international equity, 39.33% to U.S. bonds, 2.50% to cash and 0.04% to alternative investments.

For public funds, the median return in Q1 was 2.19%. These funds had a median allocation of 43.70% for U.S. equity, 14.00% to international equity, 23.87% to U.S. bonds, 3.41% to cash, 2.67% to real estate and 1.73% to alternative investments.

Endowments and foundations, which had a median 12.66% allocated to alternative investments, returned 2.12% for the quarter. Taft-Hartley defined benefit plans returned 2.16% in Q1 and Taft-Hartley health and welfare funds returned 1.64%.

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