Plans that experienced larger declines in funded status may have “erased” losses and experienced “incrementally higher asset returns and funded status gains” as risk assets rallied through the latter half of the year, the report said.
“The same thing that caused volatility in their portfolios on the way down actually helped on the way back up,” said William Chang, pension strategist at GSAM. “When the pandemic hit last year, it was one of the quickest drawdowns, one of the quickest declines in equity markets. And the subsequent recovery and exit out of that bear market was equally as quick.”
At the end of March 2020, the top quartile of plan funded status was around 81 to 90 percent. By March 2021, that figure increased to 91 to 100 percent funded status, according to the report. GSAM attributed the improvement to the subsiding effects of the pandemic: rising vaccination numbers, declining initial jobless claims, and rising consumer confidence.
Author(s): Jessica Hamlin
Publication Date: 3 May 2021
Publication Site: Institutional Investor