Just as the outlook started to improve for DB plans, new guidance from the Canadian Institute of Actuaries could increase the solvency liabilities of indexed DB plans by up to 15%, according to Eckler's latest analysis.
Both Quebec and Newfoundland and Labrador face the largest pension risk because of the size of their unfunded pension liabilities relative to their revenues, according to a report from Moody’s.
Statistics Canada finds that the market value of Canadian employer-sponsored pension funds totaled $1.2 trillion at the end of the first quarter, up 3.9% from the fourth quarter of 2012.
The accounting deficits of DB pension plans in the United Kingdom increased over the month of August.
The funded status of typical U.S. corporate pension plans fell 0.1 percentage points to 88.1% in August according to the BNY Mellon Investment Strategy & Solutions Group.
Many employers would like to reduce the risk in their DB plan so that the level of pension risk meets the company’s overall risk management objectives. One of the reasons employers may be waiting to de-risk is because they intend to "lock in" future gains resulting from strong investment returns (which increase plan assets) or increasing bond yields (which decrease plan liabilities). However, it’s important to recognize that de-risking opportunities may emerge quickly and could be short-lived.
The funded status of state-level DB public pension plans reveals that public employee retirement promises are underfunded by US$4.1 trillion, according to a report.
I recall co-authoring a report in 1982 in which we predicted that future inflation would 9% a year for the long term. That sounds crazy now, but it seemed reasonable at the time, especially considering that inflation averaged 9.7% a year over the previous 10 years, with no end in sight.
This summer, the Canadian Institute of Actuaries released new pension mortality tables. The tables revealed longer life expectancies than were previously provided by commonly used tables. Some of the industry reaction has focused on the longevity risk faced by DB pension plans.
To address its growing DB pension deficit, the ailing Canada Post needs to gradually contract out more of its services, according to an e-brief by the C.D. Howe Institute.