Goldman's Moran on Corporate Pension De-Risking Strategies

The video discusses the current state of corporate pension plans, highlighting the rise in funded levels due to higher interest rates, strong equity performance, and voluntary contributions. It explains de-risking strategies like reducing equity exposure and increasing long-duration fixed income to better align assets with liabilities. The video also contrasts corporate plans with public plans, noting regulatory differences and the impact of ERISA and PBGC on corporate de-risking actions.

What are the main factors that have contributed to the rise in funded status of corporate DB plans?

• Lower interest rates, strong equity performance, and voluntary contributions

• Higher interest rates, strong equity performance, and voluntary contributions

• Lower interest rates, weak equity performance, and mandatory contributions

• Higher interest rates, weak equity performance, and mandatory contributions

Why might some corporate pension plans choose to reduce equity exposure and increase long-duration fixed income?

• To increase the volatility of funded status

• To better align assets with liabilities and reduce volatility

• To make a call on interest rates

• To increase exposure to credit spreads

What is a potential risk of moving into long-duration fixed income for corporate pensions?

• The long end of the curve has moved lower

• The Fed is lowering interest rates

• The Fed is raising interest rates, which may continue to rise

• The short end of the curve has moved higher

Why are public pension plans less likely to follow corporate de-risking strategies?

• Public plans are subject to ERISA and PBGC regulations

• Public plans are closed and frozen

• Public plans are long-term investors with a total return approach

• Public plans have liabilities that aren't growing

What regulatory framework do corporate pension plans fall under that influences their de-risking strategies?

• ERISA and PBGC

• FASB and SEC

• IRS and DOL

• GAAP and FASB