Administration July 7, 2015

Pension Funded Status Improves in Q215

Pension plan funded status improved from 80.7% in the first quarter to 83.4% at the end of the second quarter, according to Aon Hewitt.
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The funded status of U.S. pension plans improved in the second quarter of 2015, with the deficit declining by $81 billion for the quarter, according to an analysis by Aon Hewitt.

The Aon Hewitt Pension Risk Tracker, which evaluates daily funded status for S&P 500 companies with defined benefit pension plans, shows second quarter aggregate pension funded status reached 83.4%, up from 80.7% in the first quarter of 2015.

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“As interest rates improved over the quarter, overall plan liabilities decreased, leading to better funded status for U.S. pension plans,” says Ari Jacobs, global retirement solutions leader at Aon Hewitt. “Moving into the second half of the year, pension plan sponsors will need to keep a watchful eye on changes to interest rates, which could cause volatility in funded status.”

Funded status gains were largely driven by an estimated asset reduction of $57 billion, which was outpaced by a $138 billion reduction in liabilities year-to-date. Aon Hewitt’s analysis also showed that 10-year Treasury notes were up over the quarter (0.41%) and credit spreads widened to 0.17%, resulting in a 0.58% increase in the discount rate for the quarter for the average pension plan.

The Aon Hewitt analysis also found return-seeking assets appreciated with the Russell 3000 Index returning 0.1%. Bonds were significantly outperformed by equities, with the Barclay’s Long Gov/Credit Index returning -7.6%. Pension assets returns were down 2.1% over the quarter.

Products July 7, 2015

John Hancock Cuts Investment Expenses Again

Reductions of up to 26 basis points or up to 38% per fund vary by fund.
Reported by

John Hancock Investments announced a sweeping package of expense reductions on a broad range of funds that together represent more than $36 billion in assets under management.

Reductions of up to 26 basis points or up to 38% per fund vary by fund and result from a combination of direct cuts, contractual expense caps, new breakpoints, and growing economies of scale, the firm says.

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Funds with contractual expense reductions to net expense ratios ranging from 1 to 24 basis points include:

  • John Hancock Global Income Fund (Class A and Class I only);
  • John Hancock International Core Fund (Class A and Class I only);
  • John Hancock Small Cap Value Fund (Class A and Class I only);
  • John Hancock Small Company Fund (Class A and Class I only); and
  • John Hancock Value Equity Fund.

In addition, expenses are estimated to be between 3 and 24 basis points lower going forward for Class A shares for the following funds:

  • John Hancock Core High Yield Fund;
  • John Hancock Disciplined Value Fund;
  • John Hancock Disciplined Value Mid Cap Fund;
  • John Hancock Global Shareholder Yield Fund;
  • John Hancock International Growth Fund;
  • John Hancock International Value Equity; and
  • John Hancock Strategic Growth Fund.

John Hancock Investments also lowered expenses by 20 to 26 basis points across both the John Hancock Retirement Living II target-date suite and the John Hancock Retirement Choices target-date suite, which total 20 funds.

These expense reductions follow other fee reductions in the mutual fund lineup over the last few years.

“Maximizing the value we provide our mutual fund shareholders goes well beyond the strong risk-adjusted performance of our funds,” says Andrew G. Arnott, President and CEO of John Hancock Investments. “We remain intensely focused on fees and on ensuring that our funds are cost effective for investors.”

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