Tag Archives: db-pensions

07.08.26
by

Complexity Doesn’t Make it Good or Appropriate

By: Russ Kamp, CEO, Ryan ALM, Inc.

We have a serious retirement problem in the U.S. Defined benefit plans have mostly been replaced in the private sector, and rising contribution levels are making public pension offerings problematic for the sponsoring entities. These issues are compounded by the fact that many defined benefit plans have migrated significant assets to opaque, complex, and costly alternative investments. In the process, creating liquidity to meet ongoing benefits and expenses has become more challenging.

Managing a DB pension plan isn’t complicated, yet we continue to make it so. I read an Institutional Investor article with interest, and some alarm, that a public pension system operating with negative cash flow (contributions < benefits and expenses) has decided that the best way to address the liquidity shortfall is to move assets into “”a lot more esoteric lending strategies” like asset-based finance and royalty-based lending in sectors such as entertainment, healthcare, and aircraft engine leasing.” The CIO for this fund continued, “we’re going into a lot of illiquid structures, so we structure the portfolio to make sure we have enough liquidity to meet our benefit payments at all times,” Really????

Going into illiquid structures to ensure adequate liquidity seems oxymoronic. We’ve seen what has transpired in both private equity and private debt regarding distributions and the lack thereof. Again, our industry often brings complexity to a problem when there are far simpler ways to tackle an issue. For decades, Cash Flow Matching (CFM) has carefully matched asset cash flows of bond interest and principal with the liability cash flows of benefits and expenses (B&E) chronologically. There is no hoping that the liquidity will be available when needed.

U.S. rates are currently at levels providing plan sponsors with the ability to SECURE future B&E at low cost and with certainty barring any defaults in IG bonds (<0.2%/year for the last 40-years). Why engage in expensive, opaque “solutions” when a CFM strategy can be adopted for pennies on the $. CFM is a-sleep-well-at-night strategy, which will be comforting to not only the plan sponsor but the plan’s participants. Please stop thinking that a solution needs to be complex to be good. Some of the very best approaches are transparent, straight-forward, and inexpensive: like CFM!

07.06.26
by

It’s The Wrong Benchmark!

By: Russ Kamp, CEO, Ryan ALM, Inc.

Mark Stricherz has penned an article for The Center Square discussing the Pennsylvania Public-School Employees’ pension fund and its $41 billion shortfall. The gist of article centered on the fact that PSERS failed to exceed it’s investment benchmark last years which fund officials blamed on private equity.

A bit of background: As of Dec. 31, PSERS held $85.3 billion in assets, including $10.1 billion in private equity. Long-term return expectations for this asset class were an annual 10.06% return. The precision of the return expectation seems a bit silly and quite modest given the asset class’s poor transparency, lack of liquidity, and excessive fees. As a point of comparison, the S&P 500 returned 11.4% for the 20-years through June 30, 2026. Regrettably, PSERS’ PE funds produced only a 2.59% last year. As ugly as that return is, that is NOT the reason that PSERS is $41 billion in the whole and Pennsylvania taxpayers on the hook.

An investigation by The Center Square found that private equity was the only one of PSERS’ eight asset classes to miss its benchmarks over one-, three-, five-, 10- and 15-year periods. Interesting! I find it hard to believe that the fund had this kind of relative outperformance and yet still must deal with a $41 billion shortfall. Again, I don’t believe that PE is the sole cause.

As I’ve been reporting for years, the primary objective in managing a defined benefit plan is NOT one focused on return (the ROA). It is the SECURING of the promised benefits at a reasonable cost and with prudent risk. It is a LIABILITY objective. It doesn’t matter that a plan’s assets outperform their respective asset class objectives if the plan’s total fund fails to exceed liability growth. Presently, there are roughly 500,000 members and beneficiaries counting on those promised benefits.

A successful DB pension plan understands its commitments. You’ve made a promise: measure it – monitor it – manage it – and SECURE it! Focusing on return only guarantees volatility. Volatility of returns, contributions, and funded status. Get off the performance rollercoaster.


06.30.26
by

As a Fiduciary, Would you…

By: Russ Kamp, CEO, Ryan ALM, Inc.

Regrettably, the investment industry has trained pension fiduciaries to think in terms of returns:

  • “Can we earn 7.25%?”
  • “Can we outperform the benchmark?”
  • “Should we own more equities?”
  • “How about alternatives?”

But we at Ryan ALM, Inc. believe chasing returns is NOT the economic objective of a defined benefit plan. Pursuing a return objective only guarantees volatility and not success. Volatility of returns, volatility of the Funded Ratio, and volatility of contributions! We believe that the objective is much simpler:

Deliver every promised benefit at the lowest sustainable COST to the sponsor.

Given that objective, we help pension plans reduce the cost of delivering every pension promise through our turnkey pension sustainable solutions. Reducing cost and SECURING the promised benefits is what every stakeholder should desire from trustees, to sponsors, and most importantly, plan participants.

As a pension Fiduciary what would you do if given this choice?

Imagine two pension funds that both owe retirees $100 million over the next 30 years. One fund invests with the goal of earning the highest possible return, while the other invests with the goal of meeting every payment at the lowest expected long-term cost.

Which strategy sounds more prudent? We believe that most trustees will immediately recognize that the second action better aligns with their responsibilities as Fiduciaries.

Here’s another example to consider. Lets think about funding your pension like you would a 30-year mortgage on your home.

Would you rather:

  • Put all your money in the stock market and hope it’s there when each payment comes due?

Or:

  • Structure your cash flows so each payment is already funded when it’s due?

I believe (hope) that most people would choose the second option for a monthly obligation they cannot afford to miss. Funding your monthly benefits is the exact same thing. Why not ensure that those benefits have been secured and the liquidity available as far into the future as possible through a cash flow matching (CFM) portfolio. It is absolutely time to get off the performance rollercoaster. Bring some certainty to a very uncertain process.

In conclusion, the primary pension objective is to pay every promised benefit at the lowest sustainable cost. Everything we do at Ryan ALM follows from that premise.

06.25.26
by

The Ryan ALM, Inc. Blog

By: Russ Kamp, CEO, Ryan ALM, Inc.

Are you a recent subscriber (thank you) to the Ryan ALM, Inc. blog? Here’s a little history. I began writing this blog in 2013. I’ll never forget my elementary school friend, Tony, who helped me set up the blog, saying that I shouldn’t start one if I wasn’t going to be consistent in producing content. Well, 13-years later and there are now 1,800+ mostly pension-related posts and more than 600k words. When I joined Ryan ALM, Inc. in the summer of 2019, I was extremely grateful to Ron Ryan for supporting this effort and that support continues to this day, while also being a contributor of important content.

As a new subscriber, what should you expect to read among the plethora of posts? I believe the dominant themes are:

  1. DB Pensions exist to secure promised benefits, not maximize returns.
  2. Pension Liabilities should drive investment decisions and not the ROA.
  3. Funded status matters much more than asset returns.
  4. Cash Flow Matching (CFM) is the most prudent way to secure benefits.
  5. Custom Liability Indexes (CLI) are essential for measuring pension success – good governance.
  6. Reducing uncertainty through fully funding benefits is the true definition of pension risk management.
  7. Defined benefit plans should be protected and preserved.

As a reminder, Ryan ALM, Inc. is an independent pension risk management and SEC registered investment firm that helps defined benefit plans improve funded status, reduce liability risk, enhance liquidity, and secure retirement promises through custom liability measurement, cash flow matching, actuarially informed investment strategies, and ongoing monitoring.

Don’t hesitate to reach out to us with your questions and/or comments. They are always welcome on this blog, which can be found here.

06.17.26
by

Just Another Meme Stock?

By: Russ Kamp, CEO, Ryan ALM, Inc.

Equity markets are partying like it’s 1999! Valuations be damned! Are the improved funded ratios for defined benefit plans going to be secured through de-risking strategies or are they going to once again be subjected to the whims of the capital markets? For plan sponsors benchmarking your equity exposure to the S&P 500, are you prepared for the volatility potentially associated with the great technology concentration (now roughly 50% of the index)? For those invested in the Nasdaq indexes, are you prepared for SpaceX’s impact, which should happen soon?

Come on, folks. Let’s not repeat the mistakes of the past. Higher interest rates, higher inflation, crazy equity valuations, and geopolitical uncertainty have not seemed to tamp enthusiasm for U.S. stocks. What will? Will it take a stock like SpaceX – now valued at $2.75 trillion – to be the reason that stocks fall back to earth? SpaceX has been trading for three days. The action on the stock suggests that it is just another meme stock.

Can you believe that SpaceX has overtaken Amazon as America’s fifth-largest company? A closer examination of the fundamentals shows just how irrational our markets/investors have become. Let’s look at the current fundamentals of Amazon versus SpaceX.

Valuation

MetricSpaceXAmazon
Revenue$19.30B TTM $716.9B in 2025 
Earnings-$9.36B TTM $77.7B net income in 2025 
P/S137.7x about 3.5x 
P/E-284.2x about 34x normalized 

SpaceX’s valuation is being priced as an extraordinarily high-growth story, despite being a money-losing company, which is why its P/S is dramatically higher than Amazon’s. Amazon, by contrast, already has large-scale revenue and meaningful profitability, so its valuation looks much more grounded in current fundamentals, despite it carrying a rich valuation at 34x normalized earnings.

Profitability

Amazon is clearly ahead on earnings quality: it generated $80.0B of operating income and $77.7B of net income in 2025. SpaceX, on the other hand, reported a $9.36B trailing-twelve-month loss and a negative net margin.

Growth profile

Clearly, SpaceX’s case is mostly about future optionality: investors are paying for expected expansion in launch, satellite, and adjacent businesses rather than present-day profits. Amazon’s case is more balanced because it combines growth with profitability, especially from AWS and advertising, which support its margins.

SpaceX will need to increase sales by roughly 37x to match Amazons P/S of 3.5x. Nothing grows to the heavens – even a rocket company. Risks to pension funding seem to be skewed to the downside. It is time to take some profits and secure the promises that have been given to your plan participants. Please don’t waste another golden opportunity to fortify your plan’s funding.

06.12.26
by

Try Clapping With One Hand

By: Russ Kamp, CEO, Ryan ALM, Inc.

The only reason that your DB pension plan exists is because a promise was given to your participants that they would receive a monthly benefit for life upon meeting some requirements such as years employed and retirement age. The promise wasn’t based on whether your particular pension fund achieved the annual return on asset assumption (ROA). If the ROA was achieved – great. Contributions would be as forecasted by your actuary. If not, it would be time to ante up more in annual contributions. But at the end of the day, you remain on the hook to make that monthly payment.

Given that reality, does it make sense that the primary focus is on the ROA and not the promised benefits? Regrettably, for most of Pension America, the annual ROA is the goal. However, pursuing that objective only guarantees volatility and not success. On the other hand, we, at Ryan ALM, Inc., believe that the primary pension objective is to SECURE the promised benefits at a reasonable cost and with prudent risk. By securing that promise, you eliminate uncertainty and volatility in the funded status.

Here’s the rub, the pension liabilities are the domain of the actuaries, while asset allocation falls to the asset consultants. How often do those entities communicate? How often do you as the plan sponsor know how that promise you made is behaving? Does it make sense to you that assets are constantly being measured while the liabilities may get a once per year update 4-6 months delayed? Wouldn’t it make much more sense to have both the assets and liabilities updated at the same time so that asset allocation adjustments could be made as necessary?

Think about a bridge with two primary supports. One of the supports are representative of the actuaries and the other one is the asset consultants. To get from one side of the pension canyon to the other side, there needs to be a connector. What entity is that? It is not your investment managers, who are focused on a generic benchmark and not your plan’s liabilities. Ryan ALM believes that we can be that entity, as we provide a turnkey system of sustainable solutions to make sure that each pension fund that we support understands the promises that have been made, develops the correct cash flow roadmap, and carefully constructs the necessary match between liability cash flows of benefits and expenses with the asset cash flows (principal and interest) from IG bonds to SECURE those monthly promises.

Our mission is to secure your promises at both low cost and with prudent risk. It is not to have you sit firmly on the rollercoaster of market returns with the hope that the plan’s asset allocation will deliver a return near the ROA. The current breakdown in communication between actuaries and asset consultants is like trying to clap with one hand. As hard as you try, it just won’t work. Let Ryan ALM be your bridge. With us you’ll receive a monthly Custom Liability Index (CLI) based on your fund’s forecasted liabilities, monthly liquidity chronologically as far into the future as your allocation to a cash flow matching (CFM) mandate covers, time for the residual assets (alpha assets) to grow, low cost management fees, ongoing monitoring of the relationship of assets to liabilities, and a stable funded ratio and contribution expenses for that portion of the plan. We connect assets to liabilities through our proprietary turnkey system of four products. Think of us as the maestro leading the orchestra. Both hands are working for you and your participants.

06.10.26
by

Ryan ALM, Inc. – We Offer A Turnkey System

By: Russ Kamp, CEO, Ryan ALM, Inc.

Ryan ALM helps defined benefit pension plans understand and manage the COMPLETE economics of their pension promise. Using cash flow projections of contributions, benefits, and expenses, the Ryan organization uses its proprietary liability valuation methodologies (ASC 715 discount rates), its trademarked Custom Liability Index (CLI), and our cash flow matching strategy that we call the Liability Beta Portfolio (LBP) to develop investment SOLUTIONS designed to align plan asset cash flows with liability cash flows. It is the SECURING of those future obligations that should be the paramount activity when managing a pension plan.

We refer to this process as a turnkey system, which Ron Ryan, Ryan ALM’s Chairman, recently described in great detail. We believe that our firm is unique in this regard. Unfortunately, pension plans today receive an actuarial update at most once per year, perhaps 4-6 months delayed. They rely on their asset consultants to create an asset allocation that should reflect the funded status but often the allocations are driven by the ROA. Investment managers are then retained to manage strategies based on the asset allocation, but not the plan’s liabilities. That seems pretty disjointed to us.

Ryan ALM’s competitive advantage is its proprietary turnkey system that integrates:

  • Liability valuation through discount-rate modeling
  • Cash-flow forecasting
  • Liability benchmark construction
  • Portfolio implementation
  • Ongoing monitoring

A true repeatable framework focused on the long-term SUSTAINABILITY of pension plans. Most pension plans don’t have such a system. They receive quarterly investment reports and annual actuarial valuations, but nobody integrates the assets and liabilities into a synergistic decision-making framework. Have you ever wondered: “How has the plan’s financial health changed since our last meeting, and what risks should we be paying attention to?” If not, you should be. Do you know where your liquidity is going to come from to meet those ongoing monthly obligations?

Ryan ALM would be happy to provide you with a free cash flow analysis based on our proprietary turnkey system. Given significant uncertainty today, a short 30-minute conversation followed by our analysis could ensure that your fund is set up for long-term success.

06.05.26
by

It is Our Mission!

By: Russ Kamp, CEO, Ryan ALM, Inc.

The individual professionals on the Ryan ALM, Inc. team have both a personal and professional mission which drives us every day! What is that mission? We are driven with the goal of protecting and preserving defined benefit pension plans, which we believe are the only true retirement plans. Any other “retirement” vehicle pales in comparison. Yet, our industry has adopted practices which we believe are detrimental to the long-term stability of these critically important plans.

Pursuing an objective focused on return has created an environment that has these DB plans on a perpetual rollercoaster of performance, ultimately creating unnecessary instability and uncertainty as it relates to both contributions and funded status. As a reminder, we believe that the primary objective in managing a DB pension plan is to SECURE the promised benefits at a reasonable cost and with prudent risk. It is not a performance objective.

Recently, I reviewed a pension plan that believed its biggest challenge was improving returns. After examining its cash flow needs, we discovered the larger issue was liquidity. By addressing liquidity first, the trustees reduced risk, a key action in these uncertain times, while improving confidence in their ability to meet future benefit payments. Furthermore, most trustees I speak with are wrestling with the same issues—liquidity, uncertainty, and how much risk is appropriate at this stage of the investing cycle.

Through Cash Flow Matching (CFM), a dedicated investment-grade bond portfolio in which we carefully match asset cash flows of principal and interest against the liability cash flows of benefits and expenses, we are able to bring certainty to your cash flow needs through enhanced liquidity. I’d be happy to walk through your plan’s cash flow profile and show you how a cash flow matching approach would support your current asset allocation.

Every pension plan is different, but every trustee shares the same responsibility: ensuring promised benefits are paid. Markets will do what markets do. Interest rates will rise and fall. Economic uncertainty will come and go. The question is whether your pension plan is structured to withstand those events without jeopardizing the promises made to participants.

If you’re not completely certain that your fund is structured appropriately, let us at Ryan ALM work with you to protect and preserve your DB plan, as it is our collective mission. Your fund’s participants will appreciate knowing that their promised benefits have been secured for some period of time. If you’d like a second opinion on your plan’s liquidity profile, cash flow needs, or overall asset allocation strategy, let’s talk. A 30-minute conversation may help you see risks—and opportunities—that aren’t visible through a funded ratio or return assumption lens.

05.29.26
by

Important NIRS Statement related to Alaska

By: Russ Kamp, CEO, Ryan ALM, Inc.

I recently published a post highlighting how powerful public pension funds are as an economic force. Despite DB pension fund demise in the private sector, they remain widely used to support hiring and retention of critical public servants. However, there are gaps in their usage and significant attempts have been made to shift the burden for a dignified retirement from the employer to the employee through DC offerings.

Recently, there was a bipartisan attempt by the Alaska legislation to reintroduce defined benefit plans to public sector workers, which were shuttered to new employees back in the early 2000s. Unfortunately, the bill was vetoed by Governor Dunleavy. The following text is a statement from Dan Doonan, Executive Director, National Institute on Retirement Security related to the Alaska situation. It is excellent!

Statement on Efforts in Alaska to Restore Pension Benefits to Address Grave Workforce Shortage

WASHINGTON, D.C., May 19, 2026 – In response to the veto of bipartisan legislation passed by the Alaska legislature to provide defined benefit pensions to Alaska’s public employees, the National Institute on Retirement Security (NIRS) issued the following statement today from Dan Doonan, NIRS executive director:

“Alaska’s effort to restore a pension plan for public workers represents meaningful progress in addressing one of the state’s most pressing challenges: attracting and retaining a stable, experienced public workforce. While Governor Dunleavy has vetoed the legislation, the fact that the measure passed both the House and Senate demonstrates a growing recognition that retirement benefits are not just about retirement security — they also are an essential workforce management tool.

For years, Alaska has faced deep and growing staffing shortages and retention problems across the public sector after closing its pension plans, especially in education and public safety. Pensions are a proven tool for helping employers recruit qualified workers, reduce costly turnover, and retain experienced employees who provide continuity and institutional knowledge. Too often, Alaska has served as a training ground where workers gain experience and then leave for other states that provide pension benefits and offer public employees financial security after careers serving their communities.

Research delivered by NIRS to the Alaska Department of Education found that Alaska’s shift away from pensions contributed to higher turnover among public education employees. Alaska is a rare example in which data was available to compare the behavior of workers in the same jobs and communities, with the same employers, but with different benefit offerings. That increased worker turnover in Alaska carries real costs for employers, taxpayers, and communities alike.

Importantly, the new pension tier approved by the legislature offered an innovative middle-ground design approach to protect taxpayer interests, with both risk- and cost-sharing features.

Despite the veto, the legislation is an important step forward because policymakers from both parties acknowledge that retirement plan design directly affects workforce stability and the quality of public services. Supporters rightly argued that offering a redesigned, innovative pension plan with taxpayers’ protections would help address chronic vacancies and improve retention in critical public-sector jobs.

We hope Alaska lawmakers continue this conversation and make another run at restoring a pension option in the future. States across the country increasingly recognize that pensions remain one of the most cost-effective tools available to build and sustain a strong workforce capable of delivering essential public services.”

The National Institute on Retirement Security is a non-profit, non-partisan organization established to contribute to informed policymaking by fostering a deep understanding of the value of retirement security to employees, employers, and the economy as a whole. Located in Washington, D.C., NIRS membership includes financial services firms, employee benefit plans, trade associations, and other retirement service providers. More information is available at www.nirsonline.org.

Thanks, Dan and NIRS, for your continuing advocacy for DB pension plans.

05.28.26
by

DB Pension Plans – Powerful Economic Drivers

By: Russ Kamp, CEO, Ryan ALM, Inc.

For regular readers of this blog or the research published at RyanALM.com, you know that I/we are huge supporters of defined benefit pension plans for many reasons. Not the least is the fact that asking the average American worker to fund, manage, and then disburse a “retirement” benefit with little to no disposable income, no investment acumen, and no crystal ball to help with longevity issues is just silly policy.

Importantly, public defined benefit pensions continue to be a major contributor to economic activity in the U.S. The sheer magnitude of public pensions asset bases (>$6 trillion) and the benefits that they annually pay ($418.3 billion in 2025) make them an economic force. These impressive stats and much more can be found in the Annual Survey of Public Pensions (ASPP) released recently by the U.S. Census Bureau.

The ASPP’s annual compendium provides revenues, expenditures, financial assets, and membership information about defined-benefit public pension systems. There is additional detailed actuarial data for state and locally administered defined-benefit public pension systems.

Survey Highlights:

  • In 2025, state and local governments invested $6.49 trillion in pension plans, up 8.46% from $5.98 trillion in 2024.
  • More than 37 million people (including inactive employees) participated in state and local pension plans in 2025.
  • Employees contributed nearly 25%, while governments contributed 75.2% of the total $315.0 billion contributed to state and local government pension plans in 2025.
  • State and local government pension plans in 2025 provided $418.25 billion in benefit payments to beneficiaries, up 3.40% from $404.46 billion in 2024. Much of that payment is spent in the recipient’s local community creating economic activity and jobs in the process.

Given the magnitude of the economic stimulus that DB pension plans provide, whether they be corporate, public, or multiemployer, they must be preserved and protected. The survey provides myriad statistics at the national level and for individual states. State and locally administered defined benefit plan information is also available. Just click on the link below.

Visit the Annual Survey of Public Pensions webpage for more information.