The average funding ratio of 19 U.S. publicly listed corporations with more than $20 billion in global pension fund liabilities totaled 86.2% at the end of 2020, up from 84.9% at the start of the year, according to a report from Russell Investments.
Strong investment returns offset a decrease in the discount rate of more than 70 basis points that brought the total liabilities of the club to more than $1 trillion for the first time, said the report released Tuesday.
Assets for the “$20 billion club” totaled $901.9 billion as of Dec. 31, up 8.6% from the start of the year, and projected benefit obligations totaled $1.05 trillion, up 7.3% from the start of the year.
Legislation to help struggling multiemployer pension funds is to remain in the COVID-19 relief measure headed for a Senate vote this week.
The package also calls for some funding relief for single-employer plans, through extended amortization periods and pension interest rate smoothing changes.
The pandemic relief package was approved by the House along party lines Feb. 27. Its pension provisions were at risk of being stripped until the Senate parliamentarian ruled late Monday that they fit the rules for a budget reconciliation process that allows Democrats to prevail under a simple majority.
Sen. Pat Toomey, R-Pa., was among a group of Republicans calling on the SEC to reject Nasdaq’s board diversity proposal.
Republican members of the Senate Banking Committee told the Securities and Exchange Commission to reject a Nasdaq proposal allowing it to require listed companies to publicly disclose the gender and racial diversity of their boards and eventually to have at least two diverse directors, citing a connection between diverse boards and corporate performance.
To date, 12 states and Seattle have enacted retirement savings programs for private-sector workers. They include OregonSaves with more than 90,000 funded accounts and $92 million in assets, the Illinois Secure Choice retirement savings program with $52.6 million and 82,852 funded accounts, and the $38 million CalSavers Retirement Savings Program that as of February had enrolled 274,024 participants, with another enrollment phase coming up.
The predominant model is an auto IRA, in which employer participation is required if no plan is already offered. Other options are a voluntary payroll deduction Roth IRA, a multiple employer plan, and a service provider marketplace, or a hybrid.
Consolidated Edison Inc., New York, expects to make contributions of $480 million to its pension plans in 2021, according to the company’s 10-K statement filed Feb. 18 with the Securities and Exchange Commission.
Most of the contribution — $441 million — will go to the utility holding company’s subsidiary Consolidated Edison Co. of New York (CECONY) Inc.’s pension plan. The company has only U.S. pension plans.
Last year, the total contribution was $332 million, of which $301 million was provided to CECONY’s plan.
Overall hiring activity tracked by Pensions & Investments fell 16.3% to $214.5 billion in 2020. The total number of hires increased to 2,424 in 2020 from 2,220 in 2019. Hires for traditional and alternative asset classes fell 10.4% and 18%, respectively. Activity dipped slightly in the first quarter, but was relatively unaffected by the COVID-19 pandemic. As with prior years, commitments to alternative investment vehicles made up the bulk of the mandates, reaching an all-time high of 1,659, up from 1,493 in 2019. Infrastructure had 146 hires, more than double the level five years ago.
Real growth: Assets committed to infrastructure have steadily grown over the past 10 years, doubling the amount from five years ago. The number of hires also jumped, from 13 hires in 2010 to 44 hires in 2015 and 133 in 2020.
Shannon M. O’Leary cited lack of diversity as a big part of the reason her foundation cut ties with three managers in the past year or so. Foundations argue that scrutiny of investment consultants and money managers lagging on the diversity front will only move the needle so far. For firms failing to meet diversity goals set by foundations, the best recourse is to fire them and reallocate capital elsewhere, sources say.
Strategies could help answer growing concerns about how to solve rising longevity risks
Dean McClelland said the OECD’s mention of tontines is a sign of growing acceptance.
Live longer could become the new retirement advice in coming years amid growing interest in tontines — investment pools where participants share longevity risks by distributing the assets of those who die as “mortality credits” to surviving participants.
The Department of Labor is no longer backing a twice-dismissed challenge to the CalSavers program, according to its Feb. 5 filing with the U.S. District Court for the Eastern District of California in Sacramento.