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Defined Benefit Pensions Update: Q2 2021

Top Recent Papers on Defined Benefit Pension Plans

In many geographies, returns of defined benefit pension plans have been buoyed by rising equity prices, despite low or negative yields on government debt. Longevity swaps and other risk transfer transaction volumes have also been higher in the past year.

Willis Towers Watson provides a quick update on how Q1 capital market returns have affected both the assets and liabilities of defined benefit pension plans in several major markets. It also gives an analysis of just-reported pension disclosures for 2020 from the SEC filings of 100 publicly traded U.S. sponsors of large pension plans, as well as a similar analysis of FTSE 350 defined benefit pension schemes.

Many of the other papers selected by Savvy Investor focus on either the U.S. or the UK defined benefit pension market.

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Public Pensions: Planning for a different decade ahead (BlackRock)

For compliance reasons, this paper is only accessible in certain geographies

2020 was an unprecedented year for public pension investors. The market shock from Covid-19 and the subsequent snapback in the price of many risk assets had provided a real-time test of plans’ strategic asset allocations and their approach to rebalancing.

Higher-Yielding Fixed Income: Closer to the endgame (Capital Group, May 2021)

For compliance reasons, this paper is only accessible in certain geographies

Capital Group suggests that diversifying allocations into bonds with higher yields could help UK defined benefit pension schemes to meet future obligations and improve funding levels.

Global Pension Finance Watch Q1 2021 (Willis Towers Watson)

Willis Towers Watson's Global Pension Finance Watch report is a quarterly analysis of how capital market performance has affected defined benefit pension plans in major global markets.

Pension Systems in the Developing World (Pensions Institute, 2021)

The Pensions Institute reviews both public and private pensions in developing countries, including discussions of demographics, pension savings, and investment performance in this 41-page paper.

The U.S Hybrid Pension Guide (National Institute on Retirement Security, 2021)

For compliance reasons, this paper is only accessible in the United States

Hybrid plans involve elements of both defined benefit and defined contribution pension plans, and come in many different guises. This report reviews hybrid plan design and looks at some jurisdictions that have implemented hybrid pension plans.

The Sustainability of U.S. Public Pensions (Brookings Institution, 2021)

For compliance reasons, this paper is only accessible in the United States

Academics from the Brookings Institution and economists from the Federal Reserve and the Bank of England come together to examine the fiscal sustainability of U.S. local and state government pension plans. The situation may not be as dire as many suspect for these public pensions.

Willis Towers Watson U.S. Pension 100 (2021)

This report updates on funded status, discount rates for pension plan liabilities, target allocations for plan assets, and other pension plan characteristics for 100 U.S. plan sponsors.

FTSE 350 DB Pension Scheme Survey 2021 (Willis Towers Watson)

For compliance reasons, this paper is only accessible in the United Kingdom

This is the 10th annual report produced by Willis Towers Watson on defined benefit pension schemes for FTSE 350 companies. It depicts aggregate balance sheet positions, discount rate assumptions, inflation data, and risk transfer trends.

Pensions De-Risking and Risk Transfer Update (LCP, May 2021)

For compliance reasons, this paper is only accessible in the United Kingdom

Lane Clark & Peacock provides updates on the UK longevity risk transfer market in 2020, including buy-ins, buy-outs, and longevity swaps.

ESG and Climate Change for Pension Funds: A trustee guide (Sackers, 2021)

For compliance reasons, this paper is only accessible in the United Kingdom

Sackers presents a regulatory update for pension trustees that covers TFCD requirements, sustainable finance disclosures, and other obligations included in recent legislation such as the Pension Schemes Act of 2021.

Ski-Slope of Doom: The most worrying chart in UK pensions (LCP, 2021)

For compliance reasons, this paper is only accessible in the United Kingdom

Will defined contribution pension pots be able to pick up the slack left by the disappearance of defined benefit pension schemes? Removing public sector employees from this analysis reveals a grim picture for retirees that are dependent on DC pension assets.

Annual Report on UK DB and Hybrid Schemes (The Pensions Regulator, 2021)

For compliance reasons, this paper is only accessible in the United Kingdom

This annual report contains information about UK defined benefit and hybrid pension schemes registered with The Pensions Regulator. It draws on data from over 5,600 pension schemes.

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