As Equities Surge, Corporate Pensions Approach Fully Funded Status

If you are a corporate pension plan sponsor, the good news is in: 2014 looks likely to be the year defined benefit plans attain fully funded status, that is, with 100 percent of the assets available to match future liabilities. In fact, says Karin Franceries, executive director of the U.S. strategy group atJ.P.摩根资产管理, one pension fund in four is now overfunded.

这也是罗素3000公司股东的好消息，为员工提供了界定的福利计划。“这是六年的第一次股东权益增加，谢谢pensions并且债务减少，谢谢pensions,” says Franceries. The increase in equity and the reduction in debt each amounted to about 7 percent, while the funding status should have reached 96 percent by December 31, according to J.P. Morgan.

这笔资金改善有两个原因。首先，2013年11月30日投资增益提高了10.38％，由纽约的投资顾问Milliman衡量。其次，计算未来养老金支出的折扣率已经增长至4.78％，从2012年12月31日增加到3.96％。这个更高的数字代表了负债贴现价值的减少。

The funded status of the 100 largest pension plans improved by $34 billion in November alone, reducing the deficit to $93 billion, as measured by the Milliman 100 Pension Funding Index. In the aggregate, Milliman’s 100 plans come close to a 94 percent funding ratio.

最后一次公司养老金赞助商享受这么快乐的新年是2007年。缺乏一个水晶球，公司最多的公司都没有特别努力维持养老金盈余，即使他们站在危机和经济衰退的边缘。这次是不同的，争论弗朗托斯，因为赞助商希望利用他们最近的好运和从金融危机中吸取的经验教训. They have several choices to consider, depending on their circumstances.

A common theme across allpension fundsis that sponsors want to protect their fully funded status or their surpluses. One way to do that is to invest more assets in固定收入尽管目前低，但如果上升，则返回。“如果你过度排放，你为什么要在投资组合中冒风险？”问弗朗托里犬。

然而，它并不是那么简单。增长资产等三个原因equitiesremain essential to pension health: longevity risk, credit risk and service costs. The impact of retirees’ increased longevity can have a 3 percent to 5 percent negative effect on plan liabilities, says Franceries. Then there is the credit component of the discount rate, which is calculated using the yield on AA corporate bonds. This is not a risk-free rate and is thus subject to default and downgrade risk. Lastly, since the average service cost for plans is 1.8 percent of liabilities, one without contributions would need a 6.9 percent return to retain its 100 percent–funded status over ten years, notes Franceries. You’ll probably need some equity component to get that return.

As a result of the financial crisis, many plan sponsors in the Milliman 100 have turned to derisking procedures, says Zorast Wadia, a Milliman consultant. Perhaps the most notable has been record-setting annuities for retirees purchased by Verizon Communications, General Motors Co. and Ford Motor Co. in 2012, transferring the risk to an insurer. (Beneficiaries received either annuity payments or a lump sum.) The annuity trend faded in 2013, probably because sponsors began locking in their improving funded status using so-called liability-driven investing with higher fixed-income allocations. The aim of LDI is not to beat a benchmark but to prudently meet known future liabilities.

从保险公司购买年金以替代养老金的费用可能会对许多公司替代陡峭。但是pension funds接近啊r reaching 110 percent funded, sponsors can take steps to lock that in, showing lifetime pension income on its financial statements instead of pension expenses, says Zorast. “It may be cheaper to keep her,” meaning the pension plan, he quips. “Now you’re turning back to the 1980s and ’90s,” which also saw overfunding.

David Zion, an equity analyst at New York–based ISI Group who heads the firm’s accounting and tax research team and who follows pension funding closely, observes that with few exceptions, notably United Technologies Corp., the current funding improvement has not yet become part of companies’ earning guidance or analysts’ earning estimates. He also cautions that improvements have not appeared across the board. Plan sponsors who bet heavily on long-duration固定收入in 2013 missed out on the surge in equity returns and interest rates. “I’ve been remindinginvestorsof that,” says Zion, who recently moved to ISI from Credit Suisse.

To further quell the excitement of those cheering on an impending pension fund bonanza, Zion points to the numerous ways pension obligations are measured. Depending on the method, some plans may not be fully funded on a termination basis derived from, for example, generally accepted accounting principles, a close-out annuity basis or the use of the Pension Benefit Guaranty Corp.’s calculations.

Zion期待着未来，预计将看到更多的计划冻结，更多的公司希望完全脱离所定义的福利养老金业务：通过年金合同，通过责任驱动投资来制定计划。

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