By: Russ Kamp, Managing Director, Ryan ALM, Inc.

We recently shared with you the Ryan ALM, Inc. Newsletter. Attached for you review is the Ryan ALM, Inc. Pension Monitor. This document uses the asset allocation output from P&I’s annual survey of the top 1000 defined benefit plans. Their survey clearly highlights significant differences in the asset allocation of corporate and public DB plans, most notably the exposure to fixed income presumably for hedging purposes.

In addition, we highlight the fact that different accounting rules (FASB vs. GASB) often lead to different conclusions. 2023’s performance differential favoring public plans was significantly smaller than the outperformance of corporate plans in 2022.

As always, we stand ready to respond to any of your questions. Please don’t hesitate to reach out to us if we can help you think through your risk reducing goals. Corporate plans have engaged in these strategies for years and the differential in funded status is stark. The US interest rate environment is providing a wonderful opportunity to take risk off the table without a substantial impact on potential returns.