Pension Plans Fare Well in June, 2nd Quarter

By ASPPA Net Staff • July 06, 2015 • 0 Comments
Overall trends in June and the second quarter of 2015 were favorable for pension plans, according to new reports.

The consultant firm October Three in a report issued June 30 said that the news was good in June. The report is based on the performance of two model pension plans; one a traditional plan, the other a cash balance plan whose investments are largely in corporate and long-duration bonds. The plans’ performance is measured using actual stock market and bond performance, as well as interest rate changes.

October Three says that the plans’ assets fell slightly in June, due to losses in the stock market and losses in the bond market due to slight increases in interest rates. But those same rising interest rates fueled improvement in the plans’ funding and accounting liabilities; that improvement was largely responsible for the month’s overall positive results.

The report notes that the June results are consistent with the overall trends so far in 2015.

October Three’s conclusions were backed by two reports concerning how pension plans did in the second quarter of 2015. According to Pensions & Investments Online, Legal & General Investment Management America (LGIMA) and UBS Global Asset Mangement both have reported that the funded ratio overall for defined benefit plans improved in the second quarter. Both also attributed the improvement to higher rates. Similarly, both studies also found that plan assets fell slightly.