Pension funding ratios decreased in the first quarter of
2016 from 83.1% to 78.8%, according to Legal & General Investment
Management America Inc.’s (LGIMA) Pension Fiscal Fitness Monitor.
The Pension Fiscal Fitness Monitor, which is a quarterly
estimate of the change in health of a typical U.S. corporate defined benefit
pension plan, showed that funded ratios decreased over the quarter as pension
liabilities grew more than assets.
A decline in interest rates was the main reason for the
decrease in funding ratio, according to LGIMA’s Head of Solutions Strategy Don
Andrews. “Alternatively, funding ratios for plans that have previously
implemented liability benchmarking and/or completion management strategies fell
only about 0.6% during the quarter.”
The pension funding status of the nation’s largest corporate
plan sponsors finished 2015 at 82%, unchanged from the end of 2014, mostly due
to an increase in interest rates offset by a weak global stock market,
according to Willis Towers Watson (see “Boosting Pension Plan Funding in 2016”).
LGIMA also found that global equity markets increased 0.4%
and the S&P 500 increased 1.3% in Q1 2016. Plan discount rates fell 42
basis points, as Treasury rates decreased 44 basis points and credit spreads
widened 2 basis points. Overall liabilities for the average plan were up 7.1%,
while plan assets with a traditional “60/40” asset allocation only increased
1.6%, resulting in a funding ratio decrease of 4.3%.
Andrews adds that recent volatility in equity and
fixed-income markets highlights the importance of having a comprehensive
de-risking strategy.
The Pension Fiscal Fitness Monitor assumes a typical
liability profile and 60% global equity/40% aggregate bond (“60/40”) investment
strategy, and pulls data from LGIMA research, Bank of America Merrill Lynch and
Bloomberg.
NEXT: Pension Funding Status from Mercer
Not all segments of the pension market were impacted the
same during the first quarter. The estimated aggregate funding level of pension
plans sponsored by S&P 1500 companies actually increased by one point to
79%, “as positive equity markets more than offset the decrease in discount
rates,” Mercer reports.
As of March 31, the estimated aggregate deficit of $492
billion for these companies is now $88 billion more than the $404 billion
deficit measured at the end of 2015.
The last month of the quarter shows just how fickle pension
funding numbers can be, relative to market returns. The S&P 500 index
gained 6.6% and the MSCI EAFE index gained 6.0% in March, yet the typical
discount rate for pension plans as measured by the Mercer Yield Curve decreased
by 23 basis points, to 3.80%.
“March was a great reminder of how much influence interest
rates have over the funded status of pension plans,” says Jim Ritchie, a
partner in Mercer’s retirement business. “Despite strong equity markets in
March, the S&P 1500 pension funded status only increased by one point
because of an approximately 20 basis point decrease in interest rates. As rates
continue to stay at historic lows, more and more plan sponsors are considering
moving toward glide-path and other liability-driven investment strategies and
abandoning the hope that long-term interest rates will rise in the near
future.”
NEXT: Report From Wilshire Consulting
Other sources of pension funding data published similar analysis,
including Wilshire Consulting.
According to Wilshire's research, the aggregate funded ratio
for U.S. corporate pension plans increased by 2.1% to 80% for the month of
March 2016, but was down 2.6% for the first quarter from 82.6% at the end of 2015,
according to Wilshire Consulting.
“The March rise in funding levels was driven by a 4.8%
increase in asset values thanks to a 7% to 8% surge in global stocks, but that
was partially offset by a 2.1% increase in liability values,” says Ned McGuire,
vice president and member of the Pension Risk Solutions Group of Wilshire
Consulting. “The liability result is due to declining corporate bond yields
used to value pension liabilities.”
NFP Advisor Services
to Rebrand as Kestra Financial
Insurance broker and consulting firm NFP has entered into an
agreement with funds managed by Stone Point Capital LLC, a private equity firm
focused on investing in the global financial services industry.
In connection with the transaction, NFP Advisor Services
will change its name to Kestra Financial. “As part of the agreement, Stone
Point will acquire majority ownership of Kestra, and NFP’s
ultimate parent will maintain a substantial minority
ownership stake,” the firms explain.
The transaction will contribute to the newly branded
Kestra’s “continued long-term success by enhancing the services and differentiated
capabilities it offers independent financial advisers.” Within this wider goal,
Stone Point will also look to “further strengthen Kestra’s wealth management
solutions, integrated technology platform and business consulting offerings.”
The transaction, which is subject to customary closing conditions, is expected
to close within 90 days.
Douglas Hammond, chairman and chief executive officer of
NFP, says the agreement “creates an optimal structure for NFP and Kestra, and
enables NFP to focus on its core insurance brokerage and consulting
competencies while promoting continued alignment between the two companies.”
James Poer, president and chief executive officer of Kestra,
adds that the firm looks forward to rolling out “customized service and first-class
technology.”
Arnerich Massena Inc., an independent investment advisory
firm specializing in wealth management services, investment strategies and
retirement plan consulting, announced that Lori Mueller has been promoted to
chief financial officer.
Mueller, who has served as managing director of finance for
Arnerich Massena since 2014, will provide financial analysis and insight to
help guide the company’s strategic and resource planning process. She oversees
all finance-related functions of the firm and also serves on the firm’s executive
leadership team.
Prior to joining Arnerich Massena, Mueller served as vice president,
finance and administration, for the OHSU Foundation, with more than $900
million in assets, where she oversaw the accounting, investment, and office
management functions. She also held the roles of controller and chief financial
officer for the Physicians’ Association of Clackamas County.
Mueller holds a bachelor of science in finance from Portland
State University.
Dave Nute, chief operating officer, says Mueller’s service
“has been invaluable in positioning the firm strategically to best serve our
clients.” He also points out that Mueller’s promotion coincides with Arnerich
Massena’s 25th year in business.
Pentegra Retirement Services Names Regional Director for
Upper Midwest
Pentegra Retirement Services announced that Matt Petersen
has joined the organization as regional director for Pentegra’s qualified
retirement plan sales.
Reporting to Pete Swisher, Pentegra’s senior vice president
of national sales, Petersen will “spearhead the company’s business development
efforts for the upper Midwest.” According to Swisher, “We are excited to have
Matt on board. With extensive knowledge of qualified retirement plan solutions,
strong relationships and a solid track record of success, he will be
instrumental in working to expand the organization’s scope, reach and
relationships throughout the upper Midwest.”
Petersen brings a decade of industry experience to Pentegra,
having worked most recently as a regional VP with Transamerica Retirement
Solutions.
Petersen received his bachelor of arts in economics and
communications from Lake Forest College and holds his accredited retirement
plan consultant (ARPC) designation. Additionally, Petersen maintains FINRA
Series 6, 63 and Life Insurance licenses.
Vest Enhances Asset Management Business with Appointment
of Steve Neamtz
Vest, a provider of protective investment strategies, appointed
Steve Neamtz to the position of senior managing director.
In this role, Neamtz will “spearhead Vest’s expansion of its
protection-oriented offerings into asset management with a product line up
which includes Unit Investment Trusts (UITs), mutual funds, closed-end funds,
and exchange-traded funds (ETFs).”
Karan Sood, chief executive officer at Vest, explains that
the firm utilizes an online platform to “make it easier than ever before for
financial advisers to gain access to protective investment strategies.”
“Investors want to be invested in the financial markets, but
they don’t want to sacrifice significant capital or peace of mind in the
process,” Neamtz comments. “I’m thrilled to help bring Vest’s investment
approach to mutual funds and ETFs. With built-in protection, I’m confident
investors will find their respective value propositions to be very compelling.”
Neamtz previously served as head of distribution at NATIXIS,
AIG SunAmerica, and Virtus. While CEO of distribution at AIG SunAmerica, he
helped to launch multiple open-end mutual fund product lines and helped launch
the first two NYSE-listed closed-end offerings in the company’s history. He
holds a BS in marketing and finance from Pennsylvania State University.
The Retirement Advantage Adds Sales Rep
The Retirement Advantage (TRA), provider of retirement plan
solutions, announced the hiring of Phil Kennedy as their latest regional sales
consultant, covering a territory of Colorado, Utah, Nebraska, Wyoming, North
and South Dakota.
Kennedy will report to Craig Mazzini, national sales manager
of TRA.
Kennedy will be responsible for partnering with plan
advisers and plan providers, and designing and implementing optimal
employer-sponsored retirement plans, focusing on privately-held businesses with
up to 1,000 employees.
Kennedy has worked in the financial services and retirement
plans industries for nearly a decade. For the past several years, he has held
various sales management roles with Lincoln Trust and Great West Financial and
most recently, a regional TPA. He graduated from Metropolitan State University
of Denver with a bachelor of science degree in finance and financial management
services. He currently holds the FINRA Series 7 and 63 securities licenses.
GW&K Adds Taxable Bond Portfolio Manager to Roster
GW&K Investment Management, an investment management
firm offering active equity and fixed-income investment solutions, announced
Christopher Langs has joined the firm as a portfolio manager on the firm’s
taxable bond team.
Langs, who brings over two decades of fixed-income investing
experience to GW&K, was previously a high-yield portfolio manager at
Calamos Investments, where he had responsibility for U.S. and global high yield
strategies. Prior to that, Langs was a senior high-yield portfolio manager
at Aviva Investors, as well as head of research with a focus on U.S. corporate
high-yield and investment grade credit. He also held credit analyst roles
at Standish, Ayer & Wood and American International Group.
The firm says the hiring comes in response to taxable bond
assets at GW&K growing from just over $1 billion five years ago to over
$3.7 billion the end of 2015, accounting now for nearly 15% of the firm’s total
assets under management.
Langs is a chartered financial analyst (CFA) and a member of
the Boston Securities Analyst Society and the CFA Institute. He earned a bachelor
of arts from Purdue University and a master of business administration degree
in economics and finance from the University of Chicago Booth School of
Business.
Northern Trust Asset Management has named Jessica Hart as retirement practice
lead in its outsourced chief investment officer (OCIO) business, and hired two
additional investment professionals to further strengthen its OCIO team and
support recent growth.
The new hires will focus on supporting the firm’s global
family office, retirement and endowment/foundation business segments.
Hart, a 16-year Northern Trust veteran who has led global
fund construction for the multi-manager solutions group, will take leadership
of a team that manages $60 billion in global multi-asset programs for defined
benefit pensions and defined contribution retirement plans. In the OCIO role
she succeeds John McCareins, who has been appointed to lead asset management in
the Asia-Pacific region.
Joining Northern Trust are Lincoln Ellis, as a senior client investment officer for the
global family office practice, and Dan
Kutliroff, as a senior sales specialist in the retirement practice.
These new positions “also allow for personnel changes internally to strengthen
support for endowment and foundation clients as well as the other OCIO teams,”
the firm says.
Hart joined Northern Trust in 2000 and served in a variety
of senior roles in multi-manager solutions, most recently as global head of manager
research and fund management, leading a team of 15 senior research and
portfolio analysts. She is co-manager of nine multi-manager mutual funds in the
Northern Funds family and was a key player in developing the funds.
A 20-year investment veteran, Ellis was most recently an
independent adviser, portfolio manager and assets allocator for family office
clients. Ellis spent eight years at Morgan Stanley in various roles from new
client acquisition to asset allocation and investment strategy.
Kutliroff joins with more than 20 years of experience as an
adviser to corporate retirement plans, most recently as director of OCIO sales
in the Midwest for Mercer Investments. Prior to that, Kutliroff spent 17 years
as an actuary for corporate plan sponsors.
Related to the new hires, Northern Trust Asset Management
also announced that John Keshner,
who has been the practice lead for both endowment/foundation and global family fofice
clients, will focus solely on the E&F segment, while Mark Maly will lead the global family
office advisory practice. Also in support of new business and continued
momentum in the E&F space, Paul
Partington will expand his role as a senior client investment officer to
include both E&F and GFO clients.