Corporate Defined Benefit Plans have benefited from 2013's huge market gains in equities. Funding ratios, which gauge assets relative to liabilities, have improved by 11 percent for the average corporate pension fund, according to a research paper released by PIMCO entitled "De-Risking Pensions in a Time of Tapering."
Rene Martel and Markus Aakko, both executive vice-presidents for the Newport, Ca., based global investment management firm, co-authored the paper, which cites the Milliman 100 Pension Funding Index as proof of improved funding in corporate defined benefit pension plans.
And while this is a good problem to have, the question going forward is what to do with the gains. Many pensions plans, according to the PIMCO paper, have a preset "glide path" that calls on riskier assets to be reinvested into safer instruments after a period of improved funding.
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