US Pensions - A collection of the best papers

Top Papers on US DB and DC Pensions

Some of the best papers from this year relating to US pensions are drawn together in the list below. On Monday, we will be announcing the list of the very best papers of 2019 in the Savvy Investor Awards 2019. 

US DB and DC schemes are facing the same pressures of low interest rates and increasing longevity as found in other parts of the Developing World. The response by plan sponsors has been varied, with some considering moves to LDI or other general de-risking strategies, whilst some schemes with more investment flexibility are considering other investment approaches, including increasing weightings to alternative assets and illiquid investments.

Among this collection of papers, news, views and opinions on a wide range of issues affecting both US DB and DC schemes are drawn together, including articles on scheme buy-ins and other risk mitigation strategies, along with proposed regulatory changes and approaches by trustees and investors to a low yield investment environment.

U.S. DB dilemma: How do investment decisions affect stock returns? (Wellington, 2019)

Wellington investigates the effects that de-risking corporate defined benefit (DB) plans, often by adopting an LDI approach, has upon the value of a company’s stock.

Defined Contribution Viewpoints, Q4 2019 (GSAM)

GSAM’s Defined Contribution Viewpoints takes a look at current market conditions, reviews legislation currently in transition in Washington D.C. and also provides a regulatory update

Your target-date portfolio doesn't need to be that risky (Intech blog, 2019)

In this blog post, Intech outline ways in which risk mitigation strategies that focus upon the largest asset class, usually equities, may improve outcomes.

2019 survey of U.S. pension sponsors (Vanguard)

Vanguard's Survey of Pension Plan Sponsors investigates the various challenges faced by defined benefit pension (DB) plans and their sponsors, including increasing longevity and low interest rates.

2019 U.S. Defined Contribution Benchmarking Survey Report (Deloitte)

Deloitte’s Defined Contribution Benchmarking Survey, conducted biennially, illustrates the ways in which plan sponsors are reacting to more complex retirement needs.

U.S. Corporate Pension De-Risking: More Than Just Bonds (GSAM, 2019)

GSAM’s report focuses on the de-risking of US corporate defined benefit (DB) pension plans in reaction to changing markets, longevity and other factors.

2019 Defined Contribution Trends Survey (Callan)

Callan’s survey, conducted in the fall of 2018, incorporates responses from over 100 plan sponsors. It focuses upon the major themes and results from 2018 and the prospects for 2019.

Dividend-Paying Stocks: A good source of income for pension plans (Epoch, 2019)

Epoch Investment Partners investigates one of the key issues facing defined benefit (DB)schemes; cashflows that are turning negative. Income is fast becoming a priority for many managers with low or negative bond yields in an increasing number of countries. They suggest one solution may lie in dividend-paying equities.

Cash Flow Driven Investing: Moving Beyond a Corporate Defined Benefit Solution (Aegon AM, 2019)

This report by Aegon explores Cash Flow Driven Investing as a potential investment solution in situations away from its traditional home in corporate defined benefit (DB) schemes. Other organisations including insurance companies, endowments and even nuclear decommissioning trusts have similar regular cashflow requirements.

Appraising home bias exposure (FTSE Russell, 2019)

In this study by FTSE Russell they examine and analyse the impact of home bias investing within equity markets by large pension fund investors from five countries, the US, UK Japan, Canada and Australia.

Secure Retirement: Connecting Financial Theory & Human Behavior (CFA Institute Research Foundation, 2019)

This paper by the CFA Institute investigates the paradox in investor behaviour, that of increasing allocations to riskier assets after they have risen significantly, and becoming much more risk averse after they have fallen.

The world's largest 300 pension funds (Thinking Ahead Institute, 2019)

A detailed analysis of the world’s largest pension funds is provided by the Thinking Ahead Institute. Total assets under management at the largest funds exceeded $18.0 trillion, although this was a small decline on 2017.

Investment Committees: More than the sum of their parts (Arnerich Massena, 2019)

Arnerich Massena’s paper identifies those qualities that assist in creating a successful investment committee.

The winning strategy for the pension market in China (McKinsey & Company, 2019)

McKinsey & Company investigates the reforms necessary to ensure that China’s three-pillar pension system is in a fit shape to meet the needs of an aging population.

2019 Global Survey of Accounting Assumptions for DB Plans (Willis Towers Watson)

The 2019 Willis Towers Watson Global Survey of Accounting Assumptions for Defined Benefit Plans sets out the assumptions made by global corporations for their defined benefit (DB) schemes

ABOUT THE AUTHOR

Andrew Perrins is a former Actuary and Asset Allocator. After qualifying as an Actuary, he worked for 15 years in investment management, serving as Director of Asset Allocation for Abbey Life and for Chase Manhattan, before setting out on a more entrepreneurial path.

To contact him, email [email protected]