Defined-benefit pension plans headed further into the black last month with a $57 billion boost to their funded status.
The Milliman 100 Public Pension Funding Index posted a funded ratio of 76.8% in July, up from 75.8% a month earlier as positive market performance boosted pension plans’ investment returns by an estimated aggregate of 1.9% (with a range for individual plans of 0.1%-1.9%).
During July, the deficit between the estimated assets and liabilities decreased from $1.467 trillion at the beginning of the month to $1.410 trillion at the end of the month.
The approximately $82 billion of market value gained by the plans was offset by net cash flow of around $10 billion and taking the total value of assets of the funds in the index to $4.7 trillion.
"The July 31 funded status is now the highest ratio we've seen since May 31, 2022, when it reached 78.4%," said Becky Sielman, co-author of Milliman's PPFI. "This improvement pushed two more plans over the 90% funded mark, for a total of 19, while the number of plans less than 60% funded remains stable at 23."
Milliman has also published the midyear results of its Multiemployer Pension Funding Study, which analyzes the funded status of all multiemployer defined benefit pension plans in the U.S.
At the half-way point of the year, the funding shortfall for all multiemployer plans fell by about $65 billion, resulting in an aggregate funded percentage of 87%, up from 79% at the end of 2022.
Around 45 plans received special financial assistance totaling almost $50 billion and without that the aggregate funded percentage would have been 81%. The report says that those plans that received the funding were insolvent or about to be.
"The funded status of most plans will continue to be influenced primarily by investment returns," said Tim Connor, a principal at Milliman and co-author of the MPFS. "The plans that receive SFA may be able to pursue new strategies that weren't feasible before thanks to a boosted funded percentage. With nearly 30 years of expected solvency ahead of them, these plans can consider a merger with another plan or changes in plan design that may improve their chances to extend solvency indefinitely."
While industry statistics pointing to a succession crisis can cause alarm, advisor-owners should be free to consider a middle path between staying solo and catching the surging wave of M&A.
New joint research by T. Rowe Price, MIT, and Stanford University finds more diverse asset allocations among older participants.
With its asset pipeline bursting past $13 billion, Farther is looking to build more momentum with three new managing directors.
A Department of Labor proposal to scrap a regulatory provision under ERISA could create uncertainty for fiduciaries, the trade association argues.
"We continue to feel confident about our ability to capture 90%," LPL CEO Rich Steinmeier told analysts during the firm's 2nd quarter earnings call.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
