Articles | August 6, 2024
3‑Point Rise in Model Pension Plan's Funded Status
During the second quarter (Q2) of 2024, the funded status of the model pension plan examined in each issue of Prism rose by 3 percentage points, to 107 percent, as illustrated in the graph below.
This increase in funded status is attributable to a 1 percent increase in assets and a 1 percent decrease in liabilities.
Change in Assets, Liabilities and Funded Ratio
Source: Prism Review of Second Quarter 2024
Aspects of investment performance that contributed to the model plan’s increase in asset value
Domestic equities again had positive returns in Q2, continuing a strong calendar year for U.S. stocks.
U.S. unemployment remains low, inflation remains muted and corporate profits remain strong (although somewhat concentrated with the largest companies) — all supporting strong market performance.
Fixed income returns were mostly negative around the globe, with interest rates ticking slightly higher during the quarter.
Examine your own DB plan’s experience
Plan sponsors should examine changes in their own DB plans’ assets, liabilities and funded ratios from the vantage point of both accounting and funding metrics.
We can help employers project their DB plans’ funded ratios with a complete view of the range of a plan’s possible future statuses, presenting early warning signs of potential challenges.
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The information and opinions herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This article and the data and analysis herein is intended for general education only and not as investment advice. It is not intended for use as a basis for investment decisions, nor should it be construed as advice designed to meet the needs of any particular investor. On all matters involving legal interpretations and regulatory issues, investors should consult legal counsel.
