NEPC, LLC, one of the largest independent, research-driven investment consulting firms, today announced the results of a survey conducted to assess corporate and healthcare pension plan sponsors’ views on strategy, risks and investments.
Top findings include:
Declining equity markets through June 30 and discount rates have impacted funded ratios of all plans, including well-funded plans: Only 38% of respondents had a projected benefit obligation funded ratio (PBO) greater than 90%. This is a decrease from the 58% of respondents with the same PBO in 2019 and represents the lowest percentage of plans with a PBO ratio greater than 90% since 2012.
Large plan sponsors are issuing debt to finance operations: Fifty-four percent of large plans (over $1B in assets) indicated they issued debt in 2020. The majority of these respondents (61%) cited doing so to help finance company operations. While only 24% of total respondents with assets below $1B have issued debt this year, almost half of all healthcare plans with assets below $1B have done so.
Sponsors listed COVID-19 and the U.S. election as top threats to their investment program, cited by 41% and 23% of respondents, respectively: Healthcare plans were more likely to list COVID-19 as their top concern, with 45% of respondents indicating so, compared to 38% of corporate plan sponsors.
"Pension plan sponsors are facing headwinds, but our survey shows they’re not getting distracted from their long-term investment strategy," said Brad Smith, Partner at NEPC and member of the firm’s Corporate Defined Benefit Practice Group. "Plan sponsors have remained disciplined during a very volatile year and continue to manage new risks even amid COVID-19 and election uncertainty."
Survey respondents represent more than $101 billion in assets with 64% of survey respondents overseeing more than $500 million in assets.
About NEPC, LLC
NEPC is an independent investment consultant and private wealth advisor with more than 30 years’ experience. Combining a proprietary research team dedicated to the long-term challenges facing institutional and high-net-worth investors, with our unique client-centric model, NEPC builds forward-looking investment portfolios.
We service over 391 retainer clients representing assets over $1.1 trillion from our offices in Boston, Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Portland, and San Francisco.
To learn more about NEPC, visit nepc.com.
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