Wilshire Consulting: Corporate Pensions Drop Slightly in May, Maintain 6% YTD Increase

The aggregated funded ratio of US corporate pension plans dipped slightly in May, but overall have seen a year-to-date (YTD) increase of 6%, according to Wilshire Consulting. The global advisory firm estimated the reason for the 0.2% decrease in May (from 83.8 % to 83.6%) is due to the increase in liability values.

“May marked the second-consecutive month of small declines in funded ratio after seven consecutive months of rising or flat funded ratios,” said Ned McGuire, vice president and a member of the Pension Risk Solutions Group of Wilshire Consulting. “This month’s decrease was driven by the increase in liability values caused by the 11 basis points fall in corporate bond yields used to value pension liabilities. Positive returns for most asset classes nearly offset this rise in liability values.”

A 1.7% increase in liability values nearly offset by a 1.5% increase in asset values drove the change downward. The aggregate funded ratio is also down 0.5 percentage points (from 84.1% at the end of March), yet up 1.7 percentage points year-to-date.

April also saw a similar situation, as the funded ratio was down 0.3% for the month but managed to receive a 1.9% YTD increase, up 6.6% from the previous year. April only received a 1.3% increase in liability values and increased its asset values by just 1%. Since January, the funded ratio has been steadily increasing, with the exceptions of April and May.

photo credit by dockie

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Tags: corporate pensions, liability, Wilshire, Wilshire Consulting

Deborah Kelley, a former managing director at Sterne Agee, has pleaded guilty to participating in a “pay-to-play” bribery scheme involving the New York State Common Retirement Fund (NYSCRF), the third-largest public pension fund in the US.

According to the US Attorney’s office, between 2014 through 2016, Kelley and Navnoor Kang, director of fixed income and head of portfolio strategy for the NYSCRF, “participated in a scheme to defraud the NYSCRF and its members and beneficiaries, and to deprive the NYSCRF of its intangible right to Kang’s honest services.”

Kang was responsible for investing more than $53 billion in fixed-income securities on behalf of the NYSCRF. New York State law and NYSCRF policies prohibits NYSCRF employees from receiving any bribes, gifts, benefits, or consideration of any kind, which the indictment said Kelley was well aware of. Charges against Kang for conspiracy, securities fraud, honest services wire fraud, and obstruction of justice are currently pending.

“Deborah Kelley bribed Navnoor Kang to steer state pension business to her brokerage firm, reaping hundreds of thousands of dollars in additional commissions for the firm,” said acting US Attorney Joon Kim. “The hard-earned retirement savings of New Yorkers should not be a vehicle for corrupt pension administrators and securities brokers to profit.”

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The arrangement involved an agreement among Kang, Kelley, and others to pay Kang bribes in the form of entertainment, travel, and lavish meals in exchange for fixed-income business from the NYSCRF. According to court documents, the bribes were paid secretly, and without any disclosure to the NYSCRF and its members and beneficiaries concerning the conflicts of interests.

The US Attorney’s office said that in exchange for the bribes paid by Kelley, Kang used his position at the NYSCRF to promote Kelley’s interests, and those of Sterne Agee. Kang agreed to steer fixed-income business to Sterne Agee, and by doing so, Kang, with Kelley’s knowledge and approval, breached his fiduciary duty to make investment decisions in the best interest of the NYSCRF and its participants.

The court documents said that as Kelley paid bribes to Kang, Sterne Agee’s fixed-income business with the NYSCRF “skyrocketed.” The value of NYSCRF’s domestic bond transactions with the broker-dealer increased from zero in the fiscal year ending March 1, 2014, to approximately $156 million one year later. Kang’s trades contributed to hundreds of thousands of dollars in commissions to Sterne Agee, of which Kelley personally earned approximately 35% to 40%.

Tags: Deborah Kelley, Navnoor Kang, New York State Common Retirement Fund (NYCRF), pay to play, SEC