September may be harvest season, but the finances crop was sparse this year for pension plans, say new reports.
October Three, which tracks two hypothetical defined benefit plans—one that is invested in a more traditional way and another invested in a conservative manner—reports that in September, pension finances slipped slightly. Consulting firm NEPC, which tracks a hypothetical total return plan and a hypothetical liability-driven investment (LDI) plan, similarly reports that September’s harvest was lacking.
Both of the accounts October Three tracks fared poorly in September; the funded status of the plan traditionally invested lost more than 1%, and that of the more conservatively invested plan fell by almost as much. For NEPC, the funded status of the total return plan fell by 0.7%, and that of the LDI plan fell by 0.5%; the assets of both also fell, by 2.8% and 2.9%, respectively.
October Three attributes the September results to poor stock market performance; in fact, they say “Stocks had their worst month of the year in September.” NEPC says that equity markets “backtracked.”
Still, Some Good News
Despite the September news, both firms report that the plans they track are better off than they were at the start of 2021.
NEPC says that regardless of the September slump, for the third quarter of 2021 Treasury yields improved and credit spreads “inched” higher; during the quarter, they say, the funded status of the total-return plan increased by 0.1%, and the LDI-focused plan increased 0.2%.
And October Three says that so far for 2021, both plans are faring well. The finances of the traditional plan are up by more than 9% for the year, and those of the more conservatively run plan are up by 2% for 2021 overall.
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