We are always pleased to share the Ryan ALM quarterly Pension letter.
Regular readers of the KCS quarterly piece will know that we highlight liability growth versus asset growth (borrowed from Ron Ryan) to indicate whether pension funding is improving or deteriorating. Fortunately, strong asset growth and flat yields propelled defined benefit plans to improved funding during the first three months of 2017.
However, don’t get too complacent, as yields have fallen fairly significantly so far in April, while assets have been flat to down. The nice gains could be eroded fairly quickly.
We, at KCS, are on record stating that we don’t believe that US interest rates are going to rise quickly, as we don’t see much growth in either the US or abroad. Plan sponsors and their asset consultants that move aggressively to further reduce the fund’s fixed income exposure are deepening the asset/liability mismatch that is prevalent in most public and multi-employer plans.
Ron’s work to preserve and protect DB plans should be embraced. You’ll get a feel for how unique his insights are through these quarterly letters – enjoy!