Role of Q4 2022 Investment Performance in Rise of Model Pension Plan’s Funded Status

Market dynamics contributed to the model plan’s rise in asset value

Equity and fixed income returns were positive during Q4, closing out a historic calendar year in investment markets that saw both domestic equities and domestic bonds post negative returns simultaneously for the first time in at least five decades.

Developed international and emerging market equities both performed well in Q4 and outperformed U.S. equities as China relaxed its zero-COVID-19 policy and began to reopen. A weakening U.S. dollar during the quarter provided a further tailwind for international markets.

Fixed income returns were positive in Q4 both domestically and internationally following three consecutive negative quarters.

How the plan’s funded status changed

The model plan’s funded status rose by 2 percentage points, to 106 percent, as illustrated in the graph below.

This increase in funded status is primarily attributable to a 7 percent increase in assets, partially offset by a 4 percent increase in liabilities.

Change in Assets, Liabilities and Funded Ratio

Source: Prism Review of Fourth Quarter 2022