Opportunities exist in 2019 for plan sponsors to continue to lower the costs and risks of their defined benefit plans. (Photo: Shutterstock)
Having the right pension risk management strategy at the right time has been a key to success for pension plan sponsors during this decade. Sponsors have used lump sum windows and annuity purchases to improve their balance sheet, shrink their participant base, lower their administrative costs and lower the risk their pension plan may pose to their organization.
Plans have also systematically reduced their interest rate exposure through more allocations to liability matching investments. So what can pension plan sponsors do during 2019 to keep working toward their goals?
2018 in quick review
2018 gave sponsors quite a ride on the economic roller coaster. The good news is that the FTSE discount rate ended the year up 61 basis points (0.61%). For a typical pension plan, liabilities should have been around 10% lower than they would have been at the prior year's rates.
The bad news is that a rough December led to equities being down for the year; the S&P 500 was down over 4%, the Russell 2000 was down over 11%, and international strategies were down almost 17%.
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