Tag Archives: Investing

06.02.26
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As Clara Would Ask: “Where’s the Beef?”

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

Clara Peller became famous as a result of her participation in the 1984 Wendy’s ad campaign in which she famously asks, “where’s the beef?”. Her comment was of course in reference to Wendy’s competitors whose burgers were less than impressive in size.

Yesterday, I produced a post highlighting the many benefits of cash flow matching (CFM), including providing ALL the necessary liquidity, creating an extended investing horizon, providing certainty and security, lower management fees, stable contributions/funded ratio, and the elimination of interest rate risk.

Despite the plethora of benefits, we occasionally receive push back from plan sponsors and their advisors on the use of CFM because some folks believe that they can identify a fixed income manager or group of bond managers that will “outperform” a CFM portfolio thus supporting the ROA target, as if that was the primary objective. As we’ve stated many times, the primary objective in managing a defined benefit plan is to SECURE the promised benefits at a reasonable cost and with prudent risk. It is NOT a return objective.

But, let’s just say for argument’s sake that using bonds in your fund was for return purposes. The greatest risk in managing U.S. fixed income is interest rate risk. Yes, most of us grew up in this industry during the last 40+ years when interest rates declined from ridiculous levels (10-year Treasury yield was 15.1% on the day I entered this business (October 1981)) to the zero-rate environment created by Covid-19. Most core fixed income managers continue to use the Barclays Aggregate (formerly Lehman) Index as the benchmark. The YTW on that index is 4.67%. A yield that is certainly below most, if not all, ROA targets for DB pensions (certainly public and multiemployer plans). Moreover, the yield on the Ryan ALM CFM is over 5.00% since it is a portfolio of primarily A/BBB+ corporate bonds. Our CFM should outperform the Agg by the yield difference given the same or similar duration.

Furthermore, that core fixed income manager(s) will actively position exposures related to the types of bonds, including Treasuries, agencies, MBS/ABS/CMOs, corporates, duration, sectors, etc. relative to the index to try to capture some excess return. But is “active management” adding value and what is the annual volatility or standard deviation associated with that activity? Many bond investors benefited from the nearly 4 decade decline in rates, as bond prices rose when yields fell. However, most investors today weren’t around for the 28-years prior to 1981 when U.S. interest rates rose! Things were much different for bond managers then.

Do you know in which direction interest rates will travel during the next 1-, 3-, 5- or more years? We, at Ryan ALM, certainly don’t and we don’t need to know. Given that the greatest risk to an active core bond strategy is rates, why do you remain confident that your manager(s) will consistently meet or exceed the index’s return? With CFM, there is no guessing as to what rates will do. On the day that the CFM portfolio is created, asset cash flows of principal and interest are matched against the liability cash flows of benefits and expenses. As rates move (either up or down), that careful match remains, which is how we can claim that both security and certainty (barring a default) is achieved. Your core manager can’t make that claim because the Aggregate index looks nothing like your unique liabilities.

By the way, the “Agg” is up only 0.17% for the 5-years ending May 31, 2026. On a YTD basis, the index has produced a 0.38% return. Do you think that those results are helping or hurting your fund? As Clara asked 42-years ago (oh, my!), “where’s the beef?” I can tell you. It is found in a CFM strategy and it is a whopper! 

06.01.26
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What Do You Need?

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

We are now nearly through the first half of 2026. That doesn’t seem possible. Despite the very uncertain economic and geopolitical environment, U.S. equities continue to march higher, especially for stocks associated in any way with AI. As a result, I suspect that a number of plan sponsors/trustees will say that they only need for those good times to keep rolling. But is that possible given current valuations? On the other hand, perhaps you are a sponsor/trustee that believes that nothing grows to the heavens, and as a result you might be looking to take a little risk out of your current asset allocation. If so, I have a suggestion. But first, here are a few questions that I’d like you to consider:

  • How is your fund’s current liquidity profile?
  • If raising the necessary monthly liquidity is challenging, how would you like a strategy that provides the liquidity you need, net of contributions, each month chronologically as far out as the strategy’s allocation will take you?
  • Given current equity valuations, how would you like an extended investing horizon that buys time for your fund’s alpha assets to wade through potentially choppy near-term markets without fear of forced selling to meet benefits and expenses?
  • How does reducing investment management fees sound?
  • How would you like to stabilize contribution costs and the funded ratio?
  • The investment strategy that I am referring to brings an element of certainty to the management of pensions that sorely lack that today. How does that sound?
  • How do you think your participants would appreciate knowing that their promised benefits are SECURED for the period that your new strategy covers?
  • Interest rates are the greatest threat to a fixed income (bond) investment program. How would you like a strategy that is not impacted by changes in U.S. interest rates?

Come on Kamp, is there really an investment strategy that can secure the benefits, buy time for the residual assets to just grow unencumbered, lower investment fees, eliminate interest rate risk, and provide the liquidity that I’ll need to pay my monthly bills? There sure is! For regular readers of this blog, you likely know that I’m referring to Cash Flow Matching (CFM) as the investment strategy.

This bond product carefully matches the asset cash flows of principal and interest with the liability cash flows of benefits and expenses. By doing so, the benefits are secured for the length of the program. We have assignments from 3-years to 30-years. We’ve just bought time for the assets not engaged in CFM to wade through any ugliness in markets without fear of liquidation to meet monthly payouts. Furthermore, we are matching future values which are not interest rate sensitive. A $1,000 benefit payment next month is $1,000 whether rates are at 2% or 10%. Finally, we provide our investment management services at attractively low rates.

We also provide a free analysis to any sponsor who’d like to know how CFM could benefit their fund. We’ll produce a CFM portfolio that will help you understand the potential cost reduction in the value of those future benefit promises. In today’s rate environment, we can produce portfolios that reduce the future cost of providing benefits by roughly 2% per year. Ask us to cover the next 10-years and the savings becomes very attractive and meaningful. We are ready when you are!

05.29.26
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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
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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.

05.22.26
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The Benefit of Higher U.S. Interest Rates

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

Rising interest rates can often create stresses in an economy and within the capital markets. They certainly make financing big ticket items more painful. They can destabilize equity markets, although it seems as if the current equity market is immune to any risk at this time. They harm most fixed income managers/strategies, as rising rates lower the present value of their bonds.

However, rising rates are GREAT for cash flow matching (CFM) strategies, as the higher rates reduce the cost of those future pension promises (benefit payments). We were recently asked by a public pension fund to provide them with an analysis of what CFM could potentially do for them in this environment. They provided us with the requisite data – projected benefits, expenses, and contributions as far into the future as possible – which we then ran through our cost optimization model that we call the Liability Beta Portfolio (LBP).

The output is compelling! We can secure this fund’s net (after contributions) liabilities (all of them!) through September 30, 2053. The future value (FV) of those liabilities is $86.2 million. However, the plan needs to set aside only $50.1 million in present value (PV) assets to defease those liabilities with certainty. The $36.1 million cost reduction is locked in on the day that the portfolio is created. That “savings” equates to a cost reduction of 41.9%!

So, this plan sponsor can now SECURE pension payments for 27-years. The residual assets not needed in the CFM portfolio can now grow unencumbered. If I were them I’d just buy a S&P 500 ETF creating considerable savings from lower management fees and far less complexity. Furthermore, the plan sponsor now knows what contributions will look like for the next nearly three decades. They won’t have to be alarmed should markets suffer a deep and extended correction, as the assets AND liabilities will move in lockstep.

By the way, these benefits were achieved without taking substantial risk, as our process only uses investment-grade corporate bonds rated BBB+ or better. Defaults, which are the only risk within the strategy, have been 0.2% (2/1000 bonds) annually for the last 40-years according to S&P.

Why use CFM? The benefits are incredible, including; certainty, security, all the necessary liquidity, an extended investing horizon, lower management fees, stable contributions, and improved sleep! If these benefits sound attractive to you, provide us the same info that our public fund prospect did (see above) and we’ll provide you with a free analysis, too. We are confident that you’ll be as blown away as they were and the many clients that we are proud to support.

05.21.26
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Pension Plans are NO Place for Cookie Cutter Solutions!

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

I was recently asked by a member of our investment/pension community if there was a common thread that linked my various roles during my 45-years in this business. After some thought, I said YES. For my nearly 20-years in consulting, or as the CEO for Invesco’s quant business or now at Ryan ALM, Inc. my roles have been highlighted by finding unique solutions to client or prospect challenges. I never believed that there existed an off-the-shelf-solution for my client’s unique requirements.

I continue to be motivated by this belief. I find it disconcerting that pension plans funded at quite different levels (60% vs. 90%) could have the same asset allocation. It makes no sense, yet we see that all the time. EVERY pension plan has a unique set of liabilities and asset allocation decisions should reflect those characteristics.

As an example, I attended a client’s quarterly meeting recently and listened to a consultant’s presentation regarding a new variable plan. We manage money for the legacy DB pension fund. The consultant explained that the new fund had a 5% annual return target. Yet they went on to say that the asset allocation was 60% equity, 35% fixed income, and 5% alternatives. WHY?

In today’s environment of much higher interest rates, investment grade corporate bonds of basically any maturity would provide a 5+% interest rate. Equities will likely get you more than 5% over time, but given the fund’s annual target and narrow corridor, why live with investments that come with far greater annual volatility, especially given today’s valuations, which are quite stretched by most measures?

Again, it appears to me that a 60%/35%/5% asset allocation is more of an off-the-shelf approach than one developed specifically for this client. For many plans today, the ability to meet the annual required contribution (ARC) is proving problematic. As we witnessed during the decade of the oughts, major market dislocations can have a profound impact on the sponsoring organization through ever increasing contributions. Furthermore, liquidity to meet ongoing monthly benefit payments, especially for negative cash flow plans, is proving to be difficult. These challenges need to be solved on an individual fund basis and not through a general approach.

We, at Ryan ALM, Inc., 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 return objective. Since every plan has a unique set of liabilities, no generic index or “traditional” asset allocation could ever replicate those liabilities. Managing a pension plan needs to start with understanding the client’s objective.

05.14.26
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Bonds as Performance Drivers? No, Sir!

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

U.S. fixed income benefitted tremendously from the nearly 4-decade decline in interest rates. From 1981 through 2021, the U.S. enjoyed a significant collapse in bond yields helping to fuel an unprecedented rally in risk assets. However, as Bob Dylan said, “the times they are a changin”!

The U.S. Federal Reserve’s FOMC announced on March 16, 2022, that the new Fed Fund’s target would be 0.25%-0.5% beginning on St. Patrick’s day 2022. This action marked the beginning of a rate regime change resulting from Covid-19 implications, including abundant stimulus creating massive demand for goods and services that couldn’t be met as production/manufacturing activities were disrupted.

The U.S. Fed Fund’s rate would eventually rise to 5.25%-5.50% in July 2023 (following 11 rate increases). Today, the Fed Fund’s rate stands at 3.5%-3.75%. For context, the average Fed Fund’s rate since 1971 is 5.39%, which includes a peak of nearly 20% in December 1980, and ultimately 0% in December 2008, in reaction to the GFC. It would once again hit 0% during Covid.

As a result, bond investors, such as pension plans, have ridden a rollercoaster of performance. Performance looked terrific for much of the nearly 40-year bull market but has been challenging since the Fed’s initial action in 2022. In fact, the Aggregate Index (Lehman, Barclays, Bloomberg, etc.) has produced only a 3.3% return for 20-years through March 2026. It is worse if you look at shorter timeframes, as the Index was up only 1.7% for 10-years, 0.3% for 5-years, and -0.1% YTD (all through March 31, 2026).

For pension plan sponsors and their advisors who are reluctant to utilize cash flow matching (CFM) as it might harm the pension plan’s ability to achieve the ROA, those performance #s above should be a wake-up call! As a reminder, the YTM of a CFM portfolio is a good proxy for what the fund will achieve for the period that liabilities are defeased. Given that Ryan ALM, Inc. is currently generating a YTM of 5.02% for a client with a 30-year defeasement and a 4.6% YTM for another with a 10-year CFM mandate, which result do you think is more harmful to the pension plan?

Furthermore, the CFM portfolio’s return is not predicated on the direction of interest rates, as it very much is with active core fixed income strategies. Importantly, CFM provides all the liquidity needed to meet the monthly benefit payments without having to sell assets, perhaps at inappropriate times. By cash flow matching bond principal and interest income with the plan’s liability cash flows (benefits and expenses), CFM secures the pension promises and reduces the FV cost (with certainty) of those obligations in the process. For the client with the 30-year CFM mandate, we are reducing future funding costs by -31.1% and for the 10-year CFM program, we have reduced funding cost by -28.0%.

Where are we today? After a brief respite, U.S interest rates are once again trending higher, as greater inflation takes hold. Who knows where inflation and interest rates will eventually land, but a pension plan (or E&F) could benefit tremendously in this environment by engaging Ryan ALM, Inc. and our CFM capability. The 30-year Treasury bond yield history below highlights the rising rate environment. As a reminder, Ryan ALM builds CFM portfolios using investment-grade corporate that have yields substantially higher than comparable Treasury maturities.

So, I ask: Why sit with active fixed income and subject your plan’s bond allocation to the whims of an unknown interest rate environment when you can SECURE the pension promise with near certainty (absent any defaults)? Wouldn’t it be wonderful to know that your liquidity needs are all set for some prescribed period? Wouldn’t your plan participants want to know that the promises given have been secured? Now is the time to bring an element of certainty to the management of pension assets that doesn’t currently exist. Given the geopolitical uncertainty and the potential impact on inflation, rates, and other markets, creating funding certainty should be priority #1. Why isn’t it?

05.11.26
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Milliman: Corporate Pension Funding Highest Since 2007

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

Milliman has once again released its monthly Milliman 100 Pension Funding Index (PFI), which analyzes the 100 largest U.S. corporate pension plans. It would be fascinating to see how these 100 plans differ from a list just 20-years ago.

As for today’s members, the Milliman 100 PFI plans showed improved funding by $23 billion during April. These stellar results were driven by strong equity returns as the constituents averaged a 2.13% gain. As a result, the funded ratio dramatically improved from 105.9% at the end of March to 107.8% at the end of April representing the highest level of funding since October 2007, when it stood at 108.1%. Strong investment gains increased assets by $20 billion and now stand at $1.297 trillion, while the projected benefit obligation fell slightly to $1.204 trillion, as the monthly discount rate edged up one basis point, to 5.66% from 5.65%. 

“After a flat first quarter, the funding surplus grew to $94 billion at the end of April, primarily due to strong market returns,” said Zorast Wadia, author of the Milliman 100 PFI. “This means plan sponsors continue to have more pension risk management options as plans move further into surplus territory.”

Plan sponsors would be wise to seek risk reducing strategies. The previous high watermark was achieved in October 2007, just prior to the start of the Great Financial Crisis, which pummeled markets through March of 2009. As the graph below highlights, the Milliman 100 went from a small surplus in the Q3’07 to a major deficit within 6 months. It would be another 13-years before a surplus was once again created.

Plan sponsors should secure the pension promises through a cash flow matching (CFM) strategy and then actively manage surplus assets since they’ve now created a much longer investing horizon for those assets. Ryan ALM, Inc. is always willing to provide a free analysis of what is possible through CFM.

For the full Milliman report, click on the link below.

View this month’s complete Pension Funding Index.

05.07.26
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Unique Liabilities Require A Unique Solution

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

Most pension plans have exposure to fixed income. Perhaps not as much as they did prior to 2000, but today’s common thinking is that the current exposure is enough to act as a buffer should equity markets not continue along this momentum fueled path, and finally, to support the monthly liquidity needs of the fund. But are those the right reasons to use bonds and what type of fixed income should be used to accomplish those objectives?

We observe that most funds use a variety of investment grade bonds (Treasuries, Agencies, Corporates, etc.) and they have that collection benchmarked to a generic index such as the Bloomberg U.S. Aggregate Index (a.k.a. the Agg). As a reminder, the Agg was created by Ron Ryan when he was Head of Research at Lehman Brothers a few years ago. But, again, is this the right approach? We at Ryan ALM, Inc. believe that bonds should only be used for their cash flows (principal and interest) and not as a performance driver. Bonds are perhaps the only asset class with a known cash flow equal to the value at maturity (PAR) and contractual interest payments. Those known cash flows can be modeled to meet the plan’s ongoing liability cash flows (benefits + expenses). 

Which brings me to the point that every pension plan’s liabilities are unique, and as such, no generic index such as the Agg could possibly match a plan’s liabilities. If the asset cash flows don’t match and fund the liability cash flows (benefits and expenses), the plan is subject to unnecessary interest rate risk. Again, given that every pension plan has a unique set of liabilities this would suggest that each pension plan needs to have an investment strategy created specifically for their cash flow needs. Cash Flow Matching (CFM) is an investment strategy with a very long and successful history. An appropriately crafted CFM portfolio will meet and fully fund chronologically the liability cash flows as far into the future as the allocation to the CFM strategy lasts.

We take great pride in our proprietary CFM optimization modeling, which we began using at Ryan ALM’s founding in 2004. Having the ability to tailor unique solutions to client specific issues/requests is a hallmark of our firm, and this capability is being recognized throughout the industry. In fact, we recently received this feedback from an ALM expert at a large asset/liability consulting firm, who stated that I’m “impressed with the team’s ability to build portfolios for such non-standard cashflow streams.” Thank you!

We’d be happy to demonstrate our capability and we’re always willing to provide a free analysis highlighting how your fund could benefit through CFM and Ryan ALM’s expertise. Just call us.

05.04.26
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Why Wouldn’t You Prefer a SD of +/-0%?

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

I continue to be surprised that more pension plans don’t embrace greater certainty in the management of their funds. The Iran War is leading to great uncertainty related to inflation, interest rates, and economic growth. Yes, U.S. equities have enjoyed a healthy recovery following the initial outbreak in the Middle East, but is that sustainable?

Callan does a good job of providing a regular review of what asset allocation would be necessary to achieve a 7% return and the risk (measured as standard deviation) to achieve that return objective. Callan indicated that it was very easy to achieve a 7% return all the way back in 1994 when U.S. interest rates were higher than they are today. In fact, an allocation of 85% to fixed income and small allocations to L.C. equity, SC equity, and int’l stocks would have produced a 7% return with only a 5.6% annual standard deviation.

However, in the most recent update from 2024, Callan suggests the following asset allocation is necessary to achieve a 7% return:

This means that 68% of the time, a plan sponsor should expect an annual return of 7% +/- 8.6%. At two standard deviations (95% of the observations or 19/20 years), the annual return will fall between +/- 17.2% of the 7% target. Would you be comfortable knowing that your fund could generate an annual return of -10.2%? Think about the impact a return like that would have on contributions?

What if I said that cash flow matching (CFM) a portion of your pension fund would result in those assets having an annual SD of 0% barring a default which occurs at a rate of 0.18% annually among investment grade corporate bonds for the last 40-years. How’s that possible? When CFM is implemented, the plan’s asset cash flows and matched agains the plan’s liability cash flows (benefits and expenses). They mover in lockstep with each other no matter where rates go. Today’s U.S. interest environment is attractive and getting more attractive as I write this post, as the 30-year Treasury bond yield has topped 5% (5.02% at 11:47 am DST). Higher rates are great for CFM, as they lower the present value of those future promises.

Furthermore, the use of a CFM portfolio secures the pension promises, dramatically improves plan liquidity, eliminates interest rate risk for the portion of the plan, extends the investing horizon for the residual plan assets, and reduces the cost of those future pension promises. Again, why wouldn’t you embrace an element of certainty?

I’m not sure what the Callan team would identify as the proper allocation to achieve a 7% return today, but I suspect that the annual standard deviation is greater than the 8.6% from 2024. Every time a pension plan falls short of the annual ROA, contributions must increase to make up for the shortfall. Greater investment certainty, like that associated with using CFM, reduces the likelihood that the pension plan sponsor with suffer from a negative surprise associate from increased contributions.