By: Russ Kamp, Managing Director, Ryan ALM, Inc.
We are pleased to provide you with the Ryan ALM, Inc Pension Monitor for the first quarter of 2023. As you will note, Q1’23 witnessed positive market performance for nearly all asset classes, which was a significant departure from last year’s challenging environment. That said, declining US interest rates, especially following the banking crisis that saw several banks fail and Credit Suisse acquired, produced strong liability growth under FASB accounting rules. Liability growth was 7.2% for corporates, while public and multiemployer plans using GASB accounting saw liability growth of only 1.8% based on an annual ROA of 7.5%. As you may recall, the Federal Reserve’s action to raise rates beginning in March 2022, led to significant declines in pension liabilities for Corporate America in 2022. While it is unlikely that we will see a dramatic increase in US interest rates in 2023, the Fed has indicated that it doesn’t intend to begin easing monetary policy in 2023.
The history of Ryan ALM Pension Monitors and many other research items can be found at Ryan ALM, Inc. We hope that our insights provide a useful perspective related to asset/liability management.