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What Happened in July 2017?

Market Returns

Interest Rates

  • The discount rate on the Citigroup Pension Liability Index (CPLI) fell from 3.87% to 3.86%.
  • The US Treasury yield curve flattened at the short end and steepened at the long end as rates for very short and very long maturities rose. This was relative to modestly falling rates in the middle of the yield curve.

General Economy

  • The July US unemployment rate fell to 4.3% from 4.4%. Nonfarm payroll employment rose by 209,000.
  • Manufacturing activity fell in July with the ISM Composite Index falling from 57.8 in June to 56.3 in July.
  • CPI for June was 1.6% year-over-year while core inflation (excluding food and energy) was 1.7%.
  • The advance estimate of Q2 2017 real GDP showed that the economy grew by 2.6%.

Market Summary – Total Returns through June 2017

Penbridge Pension Risk Transfer Index

About Penbridge Advisors

Penbridge Advisors provides pension plans with unbiased information and advisory services on the U.S. pension risk transfer (PRT) market and products. Penbridge provides pension plans with free access to the industry’s only database covering PRT products and providers. The firm possesses the expertise to compare the financial implications of plan termination versus plan maintenance, and to inform the process and timing of potential PRT transactions. For more information on Penbridge, please visit penbridgeadvisors.com or call 203-564-1529.

About Penbridge PRT Index

Sponsored by Penbridge Advisors, the Penbridge PRT Index represents the premium that an insurance provider would charge for a buy-out of a “typical” defined benefit plan. It is intended to illustrate relatively advantageous or disadvantageous times for a corporate plan sponsor to purchase annuities from insurance providers.

Ryan Labs Index

The return on assets in a pension trust is clearly a key driver of the funded status of a pension plan. However, pension liability values can also fluctuate significantly with changes in market interest rates. In essence, pension liabilities carry their own market returns. Plan sponsors should therefore focus on the net impact of changes in assets and liabilities on a plan’s funded status. The following table provides the estimated return on pension plan liabilities as of the end of last month as calculated by Ryan Labs, Inc. (used with permission):

Ryan Labs, Inc. Asset Management specializes in managing custom fixed income portfolios for pension plans and institutional clients. For more information on Ryan Labs, please visit ryanlabs.com or call 800-321-2301.

 


Key Interest Rates for DB Plans

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Upcoming Regulatory Due Dates

  • September 15 (DB): Final contribution deadline for calendar year plans (for the 2016 plan year).
  • September 29 (DB): Deadline for the final AFTAP actuarial certification for the 2017 plan year (calendar year plans).
  • October 13 (DB): Third quarterly contribution deadline for calendar year plans (for the 2017 plan year).
  • October 16 (DB/DC): Form 5500 due date (for calendar year plans that filed for an extension).
  • October 16 (DB): PBGC premium filings are due (for calendar year plans).