Asset returns and the recent increase in the liability discount rate have improved pension funded status, in many cases closer to full funding.
- Monitor Funded Status: Given the macro-outlook for a jolt in economic growth, assets and funded status should continue to be monitored, perhaps more frequently, if liability discount rates continue to rise.
- Protect Funded Status: De-risking opportunities can be considered. Advance planning allows for a rapid response, particularly when considering allocation to long duration, custom liability-hedging fixed income. Enhance portfolio monitoring and risk analysis, and consider liquidity, cash flow projections, and contribution strategy when setting investment strategy.
- Monitor Inflation: Review allocation to inflation-sensitive assets and the alignment with changes in liability valuation.