May 2020
15May

Firm Behaviour in Pension Funding – An Analysis of Corporate Debt Issuing

By Marion Boddy This study investigates the commonality of United States firms using the issuance of corporate debt as a tool to fund their pension plans. The results suggest a prominence of firms in the sample utilizing debt issuances to transition their fund from underfunded to overfunded. These results are indicated through a statistically significant negative relationship between the cost of debt and an underfunded indicator when regressors are lagged by one year. Results also indicate that equity issuances...

May 15, 2020
Articles, Pension Management, , ,
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14May

US. Federal Retirement Fund Halts Planned China Investment Under Pressure

A government retirement fund on Wednesday halted plans to invest in Chinese stocks this year, after growing criticism that the move would channel the savings of government workers to companies that are working against the national security goals of the United States. Read also Beijing hits back at Trump call to block US pension fund investment in China In a statement, the Federal Retirement Thrift Investment Board, which manages the retirement savings plan, said it had “deferred the transition” of...

May 14, 2020
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14May

Beijing hits back at Trump call to block US pension fund investment in China

Donald Trump’s order to stop the US government’s main pension fund from investing in Chinese equities will only hurt US investors, Beijing has warned as trade tensions between the countries threatened to turn into a “financial fight”. Beijing officials have been worried since late last year that Mr Trump would follow up his two-year China trade battle with action in financial markets. In letters to the head of the government’s main pension fund, which Mr Trump does not directly...

May 14, 2020
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13May

US. Trump Pressures Federal Pension to Halt Planned Chinese Stock Purchases

The Trump administration is pressing an independent board charged with overseeing billions in federal retirement dollars to freeze plans to invest in Chinese companies that Washington suspects of abusing human rights or threatening U.S. security. At issue is whether administrators of the Thrift Savings Plan (TSP), a retirement savings fund for federal employees and members of the military, should allow its $40 billion international fund (I-Fund) to track an index that includes some China-based stocks of companies under scrutiny...

May 13, 2020
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12May

DB Funded Status Estimates Are Mixed in April

Firms that track defined benefit (DB) plan funded status reported a range of estimates for April—from a decrease of 0.1% to an increase of 4%, depending on the group of plans being tracked. The highest increase reported was 4% (to an 80% aggregate funding level), estimated by Mercer for pension plans sponsored by S&P 1500 companies. The firm says this was the result of an increase in equity markets, which offset a decrease in discount rates. As of April...

May 12, 2020
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12May

US. How COVID-19 Has Changed Retirement Planning

The global COVID-19 pandemic has touched virtually every aspect of our lives, not least of which is how we save for retirement. Forbes Advisor commissioned a YouGov survey of 9,675 U.S. adults to get a deeper read on how coronavirus has impacted retirement planning. The answers were surprising. With a near total lockdown on business activity in the U.S., we wanted to understand how people have begun to reorient their financial priorities. As Warren Buffett explained in the Berkshire...

May 12, 2020
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11May

US. Public Pensions Could Suffer for Years from Pandemic Losses

US public pension plan sponsors and administrators are likely entering a period of fiscal stress, and rising pension obligations caused by the sudden pandemic-induced recession are expected to be felt for years by US state and local governments, according to a report from S&P Global Ratings. S&P said US public pension funds in aggregate lost approximately $850 billion during the first quarter of the year, and that they would need to rebound sharply during the second quarter to maintain...

May 11, 2020
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11May

Covid-19, Longevity Risk & the Economics of Annuitization

Although the dire medical situation and mounting economic toll of covid-19 is of immediate and first-order importance, the virus has also prompted many to ponder their own mortality. Whether it’s doctors in emergency rooms who quickly redrafted codicils or nursing home attendants pondering their own DNR instructions, the randomness or mortality is being imprinted on our susceptible behavioral minds. Interestingly, preliminary and anecdotal evidence suggests a spike in the acquisition of life insurance policies over the last few months,...

May 11, 2020
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08May

Pareto-improving transition to fully funded pensions under myopia

By Torben M. Andersen, Joydeep Bhattacharya, joydeep Bhattachary, Marias H. Gestsson Under dynamic efficiency, a pay-as-you-go (PAYG) pension scheme is often described as an “original sin”: It helps the current generation of retirees but hurts future generations because they are forced to save via a return-dominated scheme. Abandoning it is deemed welfare-improving but typically not for all generations. But what if agents are present-biased (hence, undersave for retirement) and the “paternalistically motivated forced savings” component of a PAYG scheme...

May 8, 2020
Articles, Pension design,
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08May

J.P. COVID impact on markets: research update

By Michael Cembales The first table itemizes monetary and fiscal stimulus unleashed by the Federal Reserve and other Central Banks in recent weeks, measured as Central Bank liquidity provisions, new fiscal stimulus programs and rate cuts. For context, new fiscal stimulus and total fiscal deficits in the US are roughly double the levels seen in 2008-2009, and the US fiscal deficit we project for 2020 of 15%-18% is only matched by deficits seen at the height of WWII in 1942-1943. ...

May 8, 2020
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