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P-Solve Monthly Retirement Update
November 2017 Summary
Most plans will continue to see funded status increases as equities continue to rally while discount rates remain steady. Even with discount rates down YTD, plans will most likely be better funded come year-end barring any drastic changes in rates or returns during December.
Discount Rates & Asset Returns
Discount rates remained relatively flat during November with the Citi Pension Discount Curve holding steady at around 3.78%. This represents a decrease of approximately 0.35% from the beginning of the year.
With the increasing prospects of a U.S. Tax bill, U.S. equities were one of the best performing equity regions. Foreign equities also rose as their currencies strengthened vs. the Dollar. The yield curve flattened causing longer term bonds to increase in value while shorter term segments decreased.
What’s New at P-Solve?
P-Solve Growth Continues
P-Solve adds two new investment colleagues, including defined contribution practice leader. “P-Solve is a recognized leader in developing customized risk-reduction and investment solutions for our clients,” said Phil Gorgone, Managing Director and Head of US Investments for P-Solve, “and the risks to DC plan sponsors have clearly increased. Marc Fandetti will lead our DC Team, assisting plan sponsors with reducing fiduciary risk and improving the retirement security of their employees.” Read more here.
Annuity Purchases – Continued Momentum
We are currently helping a handful of plan sponsors complete an annuity purchase to reduce plan headcount by year end. They will save significant PBGC premium costs in 2018 and the years ahead. We have also completed preliminary due diligence on two new insurers that have entered the pension annuity buyout market. Looking ahead, Q1 and Q2 of 2018 are ideal times to start the annuity purchase process to ensure the most competitive pricing. Contact us for more info.
How do I protect my plan against market corrections and negative equity returns?
With the run up in the equity markets over the last eight years, many plan sponsors are asking this question. There are strategies that plan sponsors can implement to limit their downside exposure beyond simply investing more into LDI or long-duration fixed income strategies. For more details, check out this article that explains the basics of structured equity.
SECURITY INDICES: This presentation includes data related to the performance of various securities indices. The performance of securities indices is not subject to fees and expenses associated. Investments cannot be made directly in the indices. The information provided herein has been obtained from sources which P-Solve LLC believes to be reasonably reliable but cannot guarantee its accuracy or completeness
CONFIDENTIAL: For addressee use only, not to be disclosed to any other person without express consent from P-Solve LLC. Past performance cannot be relied upon to predict future results. P-Solve LLC is an investment advisor registered with the US Securities and Exchange Commission.