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What Happened in February 2017?

Market Returns

Interest Rates

  • The discount rate on the Citigroup Pension Liability Index (CPLI) fell from 4.16% to 4.04%.
  • Treasury rates generally rose across the yield curve with the exception of the 7, 10, and 30 year maturities.

General Economy

  • The February US unemployment rate fell to 4.7% from 4.8%.
  • Non-farm payroll employment rose by 235,000.
  • Manufacturing activity increased in February with the ISM Composite Index rising from 56.0 in January to 57.7 in February.
  • CPI for January was 2.5% year-over-year while core inflation (excluding food and energy) was 2.3%.
  • The second and advanced estimates of Q4 2016 real GDP showed that the economy grew by 1.9%.

 


Market Summary – Total Returns through February 2017

 


Penbridge Pension Risk Transfer Index

About Penbridge Advisors

Penbridge Advisors provides pension plans with unbiased information and advisory services on the U.S. pension risk transfer (PRT) market and products. Penbridge provides pension plans with free access to the industry’s only database covering PRT products and providers. The firm possesses the expertise to compare the financial implications of plan termination versus plan maintenance, and to inform the process and timing of potential PRT transactions. For more information on Penbridge, please visit penbridgeadvisors.com or call 203-564-1529.

About Penbridge PRT Index

Sponsored by Penbridge Advisors, the Penbridge PRT Index represents the premium that an insurance provider would charge for a buy-out of a “typical” defined benefit plan. It is intended to illustrate relatively advantageous or disadvantageous times for a corporate plan sponsor to purchase annuities from insurance providers.


Ryan Labs Index

The return on assets in a pension trust is clearly a key driver of the funded status of a pension plan. However, pension liability values can also fluctuate significantly with changes in market interest rates. In essence, pension liabilities carry their own market returns. Plan sponsors should therefore focus on the net impact of changes in assets and liabilities on a plan’s funded status. The following table provides the estimated return on pension plan liabilities as of the end of last month as calculated by Ryan Labs, Inc. (used with permission):

Ryan Labs, Inc. Asset Management specializes in managing custom fixed income portfolios for pension plans and institutional clients. For more information on Ryan Labs, please visit ryanlabs.com or call 800-321-2301.

 


Key Interest Rates for DB Plans

For Current and Historical Rates, Click Here

For Current and Historical Rates, Click Here

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Upcoming Regulatory Due Dates

  • April 1 (DB): Ten percent reduction to prior year’s AFTAP applies for plans within ten percent of applicable benefit restriction thresholds.
  • April 15 (DB): First quarterly contribution deadline for calendar year plans for 2017.
  • April 30 (DB): 2016 plan year annual funding notices to participants are due (calendar year plans).