As a trusted advisor, we stand ready to guide Plan Sponsors through the complexities and everchanging landscape of pension plans. Below find valuable updates from our dedicated Defined Benefit Business Council.
Traditional Pension Plans
The average pension discount rate increased 12 basis points (+0.12%) during the second quarter to close at 4.92%, but fell 10 basis points since the start of the calendar year. Overall, the increase in the discount rate seen in the second quarter was a positive for funded statuses as plan liabilities decreased.
Over the past year ending June 30, the rate has increased 44 basis points and nearly doubled over the past two years. Discount rate volatility has settled down significantly as expectations around future rate hikes has also reduced (see chart below). As the discount remains elevated from its recent levels, this continues to give Plan Sponsors the opportunity to look at both de risking and risk transfer opportunities. Read more of our newsletter here…
Source: https://www.yieldbook.com/m/indices/FTSE-pension-liability.shtml
