I had the pleasure to represent the Double DB pension alliance on Fox Business today. We introduced the Double DB plan in a conversation with Adam Shapiro. We hope that you find our conversation enlightening. Ed Friend, Ron Ryan, Barry Gillman and KCS are looking forward to fielding your questions. Enjoy!
The latest KCS Fireside Chat is attached for your review. This edition is the 24th Fireside Chat in our monthly series. This one addresses the development of a new hybrid plan called the Double DB. KCS is pleased to be involved in bringing this new pension plan design to the marketplace. We believe that sharing risk among both the plan sponsor and the participant is the better approach than one entity bearing all the risk. This exciting new pension plan design accomplishes this objective, while also bringing many additional attributes to the marketplace.
Please don’t hesitate to call on us if we can answer any questions that you might have about this exciting development.
Recently I had the opportunity to speak at the Financial Research Associates’ conference in NYC on non-traditional fixed income. I had the pleasure of participating on a panel with an industry icon – Ron Ryan, Ryan ALM He and I presented on the topic “Taking a Close Look at the Liability Beta Portfolio”. However, before presenting our views on the proper use of fixed income in a defined benefit plan, especially in a low interest rate environment, Ron and I addressed the unintended consequences from accounting rules, both GASB and FASB, that have lead to an under-reporting of plan liabilities and an overstatement of plans assets. Given both, it is obvious that funded ratios are overstated, too.
The IASB (International Accounting Standards Board) has moved to a mark to market accounting of both pension liabilities and assets. It isn’t too far fetched to believe that the US will adopt these same standards in the near future. Unfortunately, since GASB uses the ROA to value plan liabilities, it becomes clear as to why the pension community continues to focus on the asset side of the equation instead of the liability side, which should be driving asset allocation and investment structure.
Attached for your review is our presentation. We encourage you to reach out to us if you have any questions or challenges.
The latest KCS Fireside Chat is attached for your review. This one addresses the importance of proactive communication in a consulting / plan sponsor relationship. To further enhance our communication with you, we have created the KCS Blog. Just in case the Fireside Chat doesn’t provide you with enough exposure to KCS, the blog is used to highlight our thoughts on current events related to the retirement industry and the markets / economy. This article highlights a few of our blog posts, but we’d encourage you to check out our blog at your convenience to see our other postings.
Finally, we are thrilled to announce that Penn Hudson has joined KCS, where he is responsible for developing client relationships. Penn brings tremendous experience and professionalism to our firm.
We at KCS have been contemplating new approaches to the management of retirement assets since our founding in August 2011. We’ve shared many of these thoughts with you through a variety of means, including our monthly Fireside Chat series, which we hope you’ve found educational.
In this month’s addition, we begin to introduce annuities into the conversation. With the demise of DB plans comes the need to create a monthly cash flow for retirees. Annuities are certainly an effective way to accomplish this objective. However, they come in a confusing array of choices and in some cases, steep costs. We believe that sponsors, both DB and DC, as well as anyone hoping to retire at some point will benefit from this article.
As usual, please don’t hesitate to reach out to us if we can clarify any point raised in this piece or if we can be of any service to you.
We are pleased to share with you the KCS First Quarter Summary. The markets proved to be more volatile during the last three months, but still positive when all was said and done. Unfortunately, plan liabilities outperformed assets by more than 5% during the quarter, reversing the trend that we witnessed in 2013. Importantly, KCS continues to provide education to a variety of market participants through various conference appearances. We feel that this is one of the most important functions for any asset / liability consulting firm.
The above Tweet caught my attention earlier today. I hope that you’ll take a few moments to read the article. The advice that they give is critically important. KCS partner, Dave Murray, experienced this issue while working with one of his clients. In Dave’s case, a young woman, with a decent-sized DC plan balance passed away. Her parents assumed that they would inherit her plan balance, but unfortunately years before she had designated a boy friend as her beneficiary. Despite the fact that this young man was no longer in the picture, the plan document superseded her will, and he was given the proceeds.
Given the serious consequences that this lapse can create, we’d recommend that you review your designated beneficiary(ies) annually.
As we touched upon in our January, 2013 Fireside Chat, the Private, Public and Union pension deficit in America exceeds $4 trillion, when assets and liabilities are marked to market. Since 1999, pension asset growth has significantly underperformed liability growth and the return on assets (ROA), causing increased contribution costs and a national pension crisis. The true objective of any pension plan is to fund their liabilities (benefit payments) at low and stable contribution costs –with reduced risk through time.
Do you need a new game plan? We’ll explore the asset allocation issues sponsors face and offer solutions for underfunded plans.
Kamp Consulting Solutions, LLC (KCS) was established in 2011 to help plan sponsors address the retirement challenges impacting the beneficiaries we are trying to protect. Action is needed today, and our highly experienced team is prepared to meet our clients’ challenges. We can assume various consulting roles for your organization, including generalist, liability-focused or project-specific. See http://www.kampconsultingsolutions.com to learn more.
We are pleased to share with you the latest KCS Fireside Chat, titled, “Is Quant Investing Dead? All Hail Quant!”
There are thousands of investment management “firms” and a multitude of investment products with various wrappers that investors can choose. Given that breadth of offerings, it becomes obvious that there isn’t one way to invest in the markets. But is there an investing approach, tool or set of skills that improves one’s odds of beating the averages? YES!
There is a longer version on this paper that is available on request.