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Mild Winter for Pension Plans, So Far

Practice Management

There were mixed results for private-sector pension plans in January, according to a variety of gauges — but the overall picture had some good news.

Willis Towers Watson reported a slight chill — its WTW Pension Index decreased 1.3% since December 2022. It attributed that result to an increase in liabilities, which in turn happened because of a decrease in discount rates partially offset by investment returns. 

At the same time, Sweta Vaidya, North American Head of Solution Design at Insight Investment, reports some January warmth. Vaidya says that as the year began, “many pension plan sponsors find themselves in well-funded positions.” However, Vaidya cautions that declining interest rates and “geopolitical uncertainty” pose potential challenges for the year. 

More specific gauges showed many common threads in January. 

Funded Status

Vaidya says that the model Insight Investment uses to gauge pension plans’ health showed that funded status improved slightly in January, moving from 102.1% on New Year’s Day to 102.5% by month’s end. Agilis says that overall funded status changed little for most plans, but improved for those that were invested more heavily in equities. 


The model plan Insight Investment tracks showed that in January, liabilities increased by 4.4%; Willis Towers Watson and Agilis also say that liabilities increased. 

Discount Rates

Insight Investment reports that the average discount rate fell by 38 basis points from 5.11% in December to 4.74% in January; it attributed this result largely to a change in the risk-free rate. Willis Towers Watson and Agilis also say that discount rates fell.

The Markets

Both Agilis and Willis Towers Watson say that in January, equity markets were up between 7% and 8%. Willis Towers Watson found the strongest gains among the domestic small/mid-cap equity asset class incurring the largest gains. 

Willis Towers Watson reports that the fixed income investments of the benchmark portfolio it tracks also had a positive return of 2.7%, and that the greatest gains were for long Treasury bonds and long corporate bonds.