In P&I’s Special Report: Corporate Balance Sheet, global head of pensions at Cambridge Associates, Brian McDonnell addresses the improved funded status that corporate plans in the US witnessed in 2017. He emphasizes the importance of financial executives understanding the various levers at their disposal — e.g., discount rates, contributions, returns — for managing funded status and their corporate balance sheet.
He shares, “We don’t see any of those levers moving enough to fix (the funded status) on their own. For an average plan that’s 80% funded, you’d have to return 15% for five years, and that’s unlikely to happen in the near-term environment. Hopefully, what sponsors took away from 2017 is that there’s a balancing act between all of these levers.”
Read the full article here.
For more of Cambridge Associates’ insights for financial executives around managing pension risk, read Balancing Act: Strategies for Financial Executives in Managing Pension Risk (November 2017).