Pension Funding Improves in Q1 17

The funded status of the model pension plan examined by Sibson Consulting and Segal Marco Advisors rose 3 percentage points to 84% in the first quarter of 2017.

The funding increase was due to a 4% gain in asset value that offset a 1% liability increase.

“Domestic and international equities both performed well this quarter, with developed and emerging market stocks showing the highest increase,” says David Palmerino, vice president at Segal Marco Advisors. “The March announcement of an interest rate hike by the Fed was largely expected and had no impact on fixed-income returns, which were overall modestly positive.”

National Retirement Practice Leader Stewart Lawrence suggests plan sponsors examine changes in their own defined benefit plans for both accounting and funding metrics. “There are two important ways plan sponsors can ensure they’re doing their due diligence: Deterministic modeling, which projects results under a specific set of assumptions, and asset-liability modeling, which offers a complete view of possible statuses for a plan and act as an early warning sign of potential upcoming challenges.”