Skip to main content

You are here

Advertisement

October Brings Plentiful Harvest for Private-Sector DB Plans

Practice Management

Harvest season has been favorable for private-sector pension plans say recent reports that note funded status improved significantly in October. Funded status also had improved in September by several measures, primarily due to a drop in plan liabilities, but October’s results outstripped those of the previous month. 

A Cornucopia 

October Three, which tracks a hypothetical plan that is traditionally invested and another that is more conservatively invested, was effusive about the results of the month that is their namesake. They report that “pension finances enjoyed their best month of the year in October.” The funded status of the traditional plan improved 6%, while that of the conservative plan improved by more than 1%. 

Fully Vested reports gains almost as strong. The funded status of the model pension plan they track improved by nearly 5 percentage points from 100.4% at the start of October to 105.2% on Halloween. Investment and actuarial firm Agilis, too, anticipated improved funded status in October. 

Assets also increased. October Three says that a diversified stock portfolio gained more than 6% in October; Fully Vested reports that those it tracks grew by 0.3%.

Liabilities, on the other hand, fell. October Three reports that they fell by 2%-3%; Fully Vested reports even an even bigger drop, 4.3%. Agilis, too, reported a drop in liabilities.

Why? 

Fully Vested attributes the improvement  in the funded status of the pension plan they track to strong equity returns and liability gains. For its part, October Three says the good news is primarily due to higher stock prices and higher interest rates.