Fixed-Income, Equity Allocations by Pension Plans at Parity
Fixed-income allocations by corporate pension plans are growing, a shift that is coming at the expense of equity allocations. The allocations are now close to parity, say recent reports.
According to Pensions & Investments online, Standard & Poor’s says that private-sector pension plans’ allocations
to fixed-income funds rose to just under 44%, while equities dropped to just over 44% of allocations by Dec. 31, 2014.
PricewaterhouseCoopers in July issued similar findings, reporting that among Fortune 100 companies, fixed-income allocations have overtaken equity allocations and that they stand at 42% and 38%, respectively.
The trend is not likely to change anytime soon, PricewaterhouseCoopers partner Ken Stoler expects. But he and Mercer Investment Consulting partner and senior consultant Jay Love point out that the shift from equities means that the plans are foregoing the stronger returns such allocations can bring.