Article October 6, 2021

US pension briefing – September 2021


Print Friendly, PDF & Email

Key takeaways

  • Discount rates were up for the second month in a row and finished the quarter roughly where they started.
  • Asset returns were generally down across the board.
  • Funded status for most pension plans likely declined during the month as liability gains were more than offset with asset losses.


September 2021 summary

September proved to be a mixed bag for pension plan sponsors. On the one hand, discount rates continued their slow upward momentum from the last couple of months. On the other hand, markets retreated for their worst month so far in 2021 with equities taking a decent hit during the month, and with rising rates, fixed income was down as well.

Even with the decline in liabilities due to increasing discount rates, for plans with modest equity exposure, funded status most likely deteriorated.


Discount rates & asset returns

FTSE pension discount rate index last 12 months

After a slight increase in August, discount rates continued to rise in September, increasing by 0.12% by month-end. Current discount rates are now up 0.35% since the end of 2020 and are up 0.22% from this time last year. The FTSE pension discount index finished September at 2.87%.


September returns (%)

Global equities declined as major central banks started taking a hawkish shift and growth momentum slowed due to supply-side disruptions. Emerging markets were dragged down as regulations weighed on Chinese equities. Long-term Treasury yields rose following the Fed’s latest projection of faster-than-expected future rate hikes and long-term corporate bonds finished down. Credit spreads stayed tight. The US Dollar appreciated while gold depreciated amid growing confidence that the Fed is ready to start winding down support measures like asset purchases.


R&M pension news

Fresh ideas on pension plan risk management

Tired of the same old ideas? We recently put together a list of creative ideas for managing pension risk.

Click here to read


Ease of implementing derivative strategies

Implementing a robust risk management strategy using derivatives is not difficult and using them in a portfolio can help to manage risk and improve portfolio efficiency.

Click here to read

SECURITY INDICES: This presentation includes data related to the performance of various securities indices.  The performance of securities indices is not subject to fees and expenses associated.  Investments cannot be made directly in the indices.   The information provided herein has been obtained from sources which River and Mercantile LLC believes to be reasonably reliable but cannot guarantee its accuracy or completeness.
CONFIDENTIAL:  For addressee use only, not to be disclosed to any other person without express consent from River and Mercantile LLC.  Past performance cannot be relied upon to predict future results.  River and Mercantile LLC is an investment advisor registered with the US Securities and Exchange Commission.

R&M pension plan services

Through a variety of strategies, we can help defined benefit plan sponsors solve some of their most acute challenges.

Two women at a meeting with a financial advisor

Latest perspectives

Annuity purchases and Guaranteed Separate Accounts

Annuity purchases and Guaranteed Separate ...

Article January 11, 2022

Article January 11, 2022 Annuity purchases and Guaranteed Separate Accounts Written by James Walton Share…

7 min read

Pandemic, policy, and prices: 2021 in review

Pandemic, policy, and prices: 2021 ...

Article January 10, 2022

Article January 10, 2022 Pandemic, policy, and prices: 2021 in review Written by River and…

5 min read

US pension briefing – December 2021

US pension briefing – December ...

Article January 7, 2022

Article January 7, 2022 US pension briefing – December 2021 Written by River and Mercantile…

3 min read

Navigating a Frozen Plan to Termination

Navigating a Frozen Plan to ...

Article January 5, 2022

Article January 5, 2022 Navigating a Frozen Plan to Termination Written by Michael Clark Share…

8 min read

Stay ahead of the curve by receiving our newsletter containing current industry developments and insights.