Data and Research September 3, 2015

Institutional Investors Fared Poorly in August

“The decline in asset values that hit typical public defined benefit plans, endowments and foundations was primarily due to poor equity performance across the globe”, says Andrew Wozniak from BNY Mellon.
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The funded status of the typical U.S. corporate pension plan declined in August, dropping by 2.5 percentage points to 84.2%.

While liabilities fell slightly due to widening credit spreads, the decline was driven by a larger drop in asset values, according to BNY Mellon Fiduciary Solutions. Public plans, foundations and endowments also failed to meet targets due to declining asset values.

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For the typical U.S. corporate plan, funded status dipped as low as 81.2% on August 24, but has since rebounded. Liabilities fell by 0.9% during the month, with the Aa Corporate discount rate rising by 9 basis points to 4.44%.

“The second half of August served as a wake-up call to investors who had been lulled to sleep by several months of low volatility in the markets,” says Andrew D. Wozniak, head of BNY Mellon Fiduciary Solutions. “Corporate defined benefit plan sponsors were somewhat insulated from the full brunt of the volatility due to rising credit spreads, which led to a decline in liabilities.”

Public defined benefit plans in August missed their return target by 4.7% as assets declined 4.1%, according to the August BNY Mellon Institutional Scorecard. Public plans have fallen short on year-to-date return targets by 6.6% and remain below their annual return target.

The August BNY Mellon Institutional Scorecard also noted that for endowments and foundations, real return was down 4.4%. According to the monthly report, asset returns for the typical endowment and foundation fell 4.3% over the past year, which is behind the spending plus inflation target by 9.8%. 

Data and Research September 3, 2015

Employees with Student Loan Debt Seek Workplace Help

They say they would value the assistance as much as health care benefits and 401(k)s.
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Nearly 80% percent of people carrying student loan debt would like their workplace to offer assistance with paying it down, iontuition, a member of the Ceannate companies, found in a survey of 1,000 individuals carrying such debt.  

Fifty-five percent said they would rather that the amount of money they are paying for health care benefits go towards their student loan debt instead, and 49% said they would rather have help with their student loans than be offered a 401(k).

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“Employers who rely on a college-educated workforce cannot ignore numbers like these,” says Balaji Rajan, chief executive officer of Ceannate. “Our survey shows that a majority of borrowers would greatly value an employee benefits package tailored to reducing and managing their student debt.”

Iontuition’s survey comes on the heels of a Bankrate.com survey that found 56% of Millennials with current or past student debt are delaying major life events, compared with 43% of older adults. The most common milestone they are postponing is buying a house, closely followed by saving for retirement and buying a car.

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