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US Corporate Pensions Get Hit in 2020?

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Michael Katz of Chief Investment Officer reports that the funded status of US corporate pensions dropped last year despite robust returns: Funding for the 100 largest corporate pension plans in the US declined $50 billion last year as their aggregate funding ratio slipped to 88.2% at the end of the year from 89.8% at the end of 2019, according to consulting firm Milliman. After sharp investment declines in the first quarter, asset returns rebounded strongly during the rest of the year. That rebound helped offset the funded status deterioration that was a result of the discount rates used to value pension liabilities continuing to fall. The funded status deficit of the 100 plans tracked by the Milliman 100 Pension Funding Index (PFI) was at $234 billion at the end of December, which was the lowest monthly funded status deficit during the year. The discount rates for the plans in the Milliman 100 fell 74 basis points (bps) to 2.46% at the end of 2020 from 3.2% at the end of

Alberta's Teachers 'Livid' at UCP and AIMCo?

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Lisa Johnson of the Edmonton Journal reports that Alberta teachers, unions 'livid' after province issues ministerial orders changing terms of public sector pensions: Public sector unions plan to launch a legal challenge after Alberta’s finance minister quietly signed ministerial orders at the end of the year that they say give the government-owned investment manager more control over workers’ pensions. One of four orders signed by Finance Minister Travis Toews on Dec. 23 changed the terms of the Alberta Teachers’ Retirement Fund (ATRF) to allow the Alberta Investment Management Corporation (AIMCo) to reject changes proposed by the pension manager in its investment policy. The orders, which came into effect Jan. 1, follow the November 2019 implementation of Bill 22, an omnibus bill introduced and passed within four days which moved investment control of 82,000 practicing and retired teachers’ pensions to AIMCo from ATRF by December 2021. Toews has said repeatedly tha

CalPERS' Former CIO on Saving America’s Public Pensions

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Ben Meng, CalPERS' former CIO, wrote a comment for Project Syndicate on saving America's public pensions: Much has been written in recent years about the plight of US public pensions. There are growing concerns about underfunded liabilities, rising implicit tax burdens, and broken promises to beneficiaries. These are not groundless fears. Many US public pensions are indeed facing severe financial pressures. These problems have begun to fuel doubts, among both current and future pensioners, about the reliability of their benefits over time, and thus about their economic security after they retire. But there are still many ways that investment staff, sponsors, and beneficiaries could work together to restore faith in the system. The key is first to understand the challenges facing the US public pension industry. One can then start to map out strategies for putting public pensions on a sound financial footing. The Pension Puzzle The main challenge facing the public p

CAAT's CEO on Moving From Pension Envy to Pension Solutions

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Derek W. Dobson, CEO of CAAT Pension Plan, wrote a guest comment for my blog on moving from pension envy to pension solutions: Many Canadians haven’t saved nearly enough for retirement. Those without any workplace saving program have a median savings of just $3,000. Such meager savings would not last the average retiree more than a year. Canada will see increased health care and social support system costs if we don’t address this gap in a meaningful and thoughtful way. The truth is, it’s not easy to save for retirement. It’s difficult to start, easy to get overwhelmed and drop out and difficult to get good unbiased advice. The best possible retirement savings plan and the one that most Canadians want is a defined benefit pension plan. Those lucky enough to have a defined benefit pension likely work in the public sector. Eight in 10 workers in government and broader public sector workers in Canada have access to a DB pension, while one in 10 private sector workers do.

The UnARKing of the Market?

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Fred Imbert and Jesse Pound of CNBC report the Dow falls more than 150 points to close out a losing week: Stocks fell on Friday to close out a tough week as traders weighed President-elect Joe Biden’s $1.9 trillion stimulus plan along with the latest earnings from some of the biggest U.S. banks. The Dow Jones Industrial Average closed 177.26 points lower, or 0.6%, at 30,814.26. Earlier in the day, the Dow was down more than 300 points. The S&P 500 dipped 0.7% to 3,768.25, and the Nasdaq Composite slid 0.9% to end the day at 12,998.50. Dow Inc. and Chevron both fell more than 3% led the 30-stock average lower. Energy dropped 4%, posting its worst one-day decline since late November, pressuring the S&P 500.  The Dow and Nasdaq posted weekly declines of 0.9% and 1.5%, respectively, to snap four-week winning streaks. The S&P 500 also lost 1.5% over that time period. Biden’s proposal, called the American Rescue Plan, includes increasing the additional federal unemployme