Industry Trends
Demographics: Size of Plan
| >$15B | $5B – $15B | $1B – $5B | $500M – $1B | <$500M | |
| ALL 2015 RESPONDENTS | 27% | 27% | 29% | 7% | 9% |
| CURRENT PLAN STATUS | |||||
| Open | 26% | 5% | 42% | 11% | 16% |
| Frozen | 22% | 26% | 41% | 7% | 4% |
| Closed | 23% | 40% | 19% | 11% | 6% |
| ENDGAME STATUS | |||||
| Keep open/maintain | 35% | 12% | 35% | 6% | 12% |
| Close/freeze/lump sum | 17% | 23% | 40% | 11% | 9% |
| Buy-in/buyout | 19% | 40% | 36% | 5% | 0% |
| Continue to manage | 26% | 26% | 34% | 10% | 3% |
Current Plan Status
| OPEN TO NEW ENTRANTS AND ACCRUALS |
FROZEN | CLOSED TO NEW ENTRANTS, STILL ACCRUING |
|
| ALL 2015 RESPONDENTS | 17% | 41% | 41% |
| >$15B | 19% | 38% | 42% |
| $5B – $15B | 3% | 38% | 59% |
| $1B – $5B | 22% | 53% | 25% |
| $500M – $1B | 20% | 30% | 50% |
| <$500M | 38% | 25% | 38% |
Your plan’s endgame…
| ALL 2015 | >$15B | $5B – $15B | $1B – $5B | $500M – $1B | <$500M | |
| Keep open/maintain | 16% | 24% | 7% | 17% | 10% | 33% |
| Close for new entrants | 14% | 8% | 10% | 17% | 20% | 33% |
| Freeze | 19% | 16% | 17% | 23% | 20% | 17% |
| Offer lump sums | 40% | 52% | 30% | 43% | 40% | 17% |
| Buyout | 36% | 32% | 50% | 37% | 20% | 0% |
| Buy-in | 8% | 4% | 13% | 9% | 0% | 0% |
| Manage/de-risk* | 58% | 64% | 53% | 60% | 60% | 33% |
| Other | 8% | 4% | 7% | 3% | 40% | 17% |
… and its target funded ratio on a GAAP basis.
| >110% | 105%–110% | 100%–105% | <100% | |
| ALL 2015 RESPONDENTS | 42% | 27% | 26% | 5% |
| CURRENT PLAN STATUS | ||||
| Open | 50% | 22% | 11% | 17% |
| Frozen | 32% | 39% | 27% | 2% |
| Closed | 49% | 18% | 31% | 2% |
| ENDGAME STATUS | ||||
| Keep open/maintain | 53% | 18% | 12% | 18% |
| Close/freeze/lump sum | 57% | 23% | 17% | 3% |
| Buy-in/buyout | 36% | 31% | 31% | 2% |
| Continue to manage | 34% | 27% | 34% | 5% |
Average Current Funded Ratio
| PPA/MAP-21 BASIS | PPA/24-MONTH AVG. SEGMENT RATES BASIS | GAAP/PBO BASIS | |
| ALL 2015 RESPONDENTS | 105% | 90% | 85% |
| CURRENT PLAN STATUS | |||
| Open | 100% | 81% | 80% |
| Frozen | 100% | 93% | 84% |
| Closed | 111% | 91% | 86% |
| ENDGAME STATUS | |||
| Keep open/maintain | 106% | 82% | 83% |
| Close/freeze/lump sum | 100% | 86% | 86% |
| Buy-in/buyout | 106% | 94% | 83% |
| Continue to manage | 106% | 93% | 84% |
Asset Allocation
| DOMESTIC EQUITY | INT’L EQUITY | ALTER– NATIVES | FIXED INCOME | CASH | |
| ALL 2015 RESPONDENTS | 22% | 14% | 17% | 50% | 5% |
| CURRENT PLAN STATUS | |||||
| Open | 33% | 17% | 15% | 44% | 1% |
| Frozen | 18% | 12% | 15% | 55% | 6% |
| Closed | 20% | 14% | 18% | 47% | 2% |
| ENDGAME STATUS | |||||
| Keep open/maintain | 30% | 18% | 16% | 43% | 0% |
| Close/freeze/lump sum | 23% | 13% | 15% | 45% | 1% |
| Buy-in/buyout | 22% | 15% | 13% | 52% | 2% |
| Continue to manage | 19% | 14% | 17% | 50% | 1% |
Average Fixed-Income/Liability Duration (in Years)
| FIXED-INCOME DURATION | LIABILITY DURATION | |
| ALL 2015 RESPONDENTS | 14.4 | 12.9 |
| CURRENT PLAN STATUS | ||
| Open | 13.4 | 13.0 |
| Frozen | 14.8 | 11.9 |
| Closed | 14.6 | 13.8 |
| ENDGAME STATUS | ||
| Keep open/maintain | 13.3 | 13.5 |
| Close/freeze/lump sum | 13.3 | 13.2 |
| Buy-in/buyout | 14.3 | 12.5 |
| Continue to manage | 15.5 | 13.0 |
Fixed-Income Portfolio Composition
| SHORT DURATION | CORE | CORE PLUS | HIGH YIELD | GLOBAL | LONG DURATION | ABSOLUTE RETURN | OTHER | |
| ALL 2015 RESPONDENTS | 4% | 5% | 2% | 3% | 3% | 78% | 1% | 5% |
| CURRENT PLAN STATUS | ||||||||
| Open | 17% | 2% | 0% | 1% | 1% | 61% | 0% | 5% |
| Frozen | 1% | 5% | 2% | 3% | 5% | 69% | 1% | 12% |
| Closed | 1% | 5% | 2% | 3% | 2% | 86% | 0% | 1% |
| ENDGAME STATUS | ||||||||
| Keep open/maintain | 12% | 1% | 0% | 1% | 0% | 78% | 0% | 2% |
| Close/freeze/lump sum | 5% | 9% | 1% | 2% | 1% | 61% | 0% | 7% |
| Buy-in/buyout | 1% | 5% | 1% | 3% | 5% | 79% | 0% | 3% |
| Continue to manage | 16% | 4% | 1% | 3% | 3% | 80% | 1% | 4% |
Plan Payment Profile (as a Percentage of Liabilities)
| 0-5 YEARS | 5-20 YEARS | 20+ YEARS | |
| ALL 2015 RESPONDENTS | 20% | 47% | 33% |
| CURRENT PLAN STATUS | |||
| Open | 22% | 39% | 38% |
| Frozen | 20% | 51% | 29% |
| Closed | 19% | 48% | 33% |
| ENDGAME STATUS | |||
| Keep open/maintain | 22% | 44% | 33% |
| Close/freeze/lump sum | 16% | 47% | 37% |
| Buy-in/buyout | 20% | 51% | 29% |
| Continue to manage | 19% | 49% | 32% |
Use of Derivatives
| CURRENTLY USE DERIVATIVES | DON’T USE, BUT PLAN TO | DON’T USE OR PLAN TO | |
| ALL 2015 RESPONDENTS | 71% | 7% | 22% |
| CURRENT PLAN STATUS | |||
| Open | 68% | 5% | 26% |
| Frozen | 67% | 4% | 29% |
| Closed | 76% | 7% | 17% |
| ENDGAME STATUS | |||
| Keep open/maintain | 63% | 6% | 31% |
| Close/freeze/lump sum | 74% | 9% | 18% |
| Buy-in/buyout | 74% | 2% | 24% |
| Continue to manage | 74% | 5% | 21% |
Percentage of Portfolio in LDI
| AVERAGE IN LDI |
MEDIAN IN LDI |
AVERAGE HEDGE RATIO |
MEDIAN HEDGE RATIO |
|
| ALL 2015 RESPONDENTS | 47% | 45% | 48% | 43% |
| CURRENT PLAN STATUS | ||||
| Open | 44% | 36% | 38% | 43% |
| Frozen | 48% | 46% | 53% | 55% |
| Closed | 48% | 44% | 49% | 42% |
| ENDGAME STATUS | ||||
| Keep open/maintain | 49% | 55% | 41% | 42% |
| Close/freeze/lump sum | 41% | 36% | 43% | 40% |
| Buy-in/buyout | 47% | 46% | 51% | 53% |
| Continue to manage | 47% | 45% | 50% | 47% |
Allocation within LDI
| DERIVATIVES | TOTAL RETURN FUNDS (I.E. LONG DURATION) |
CUSTOMIZED CASH BONDS (ALL TYPES) |
CUSTOMIZED CASH BONDS—NO BENCHMARK |
CUSTOMIZED CASH BONDS— LIABILITY BENCHMARK |
|
| ALL 2015 RESPONDENTS | 17% | 44% | 39% | 0% | 39% |
| CURRENT PLAN STATUS | |||||
| Open | 17% | 44% | 37% | 0% | 37% |
| Frozen | 22% | 43% | 44% | 0% | 44% |
| Closed | 14% | 51% | 38% | 0% | 37% |
| ENDGAME STATUS | |||||
| Keep open/maintain | 18% | 58% | 25% | 0% | 25% |
| Close/freeze/lump sum | 15% | 27% | 64% | 0% | 64% |
| Buy-in/buyout | 19% | 35% | 54% | 0% | 54% |
| Continue to manage | 21% | 57% | 29% | 0% | 29% |
Number of LDI Providers Used
| AVERAGE | MEDIAN | |
| ALL 2015 RESPONDENTS | 2.1 | 2.0 |
| CURRENT PLAN STATUS | ||
| Open | 2.1 | 2.0 |
| Frozen | 1.8 | 1.0 |
| Closed | 2.4 | 2.0 |
| ENDGAME STATUS | ||
| Keep open/maintain | 1.8 | 2.0 |
| Close/freeze/lump sum | 2.5 | 2.0 |
| Buy-in/buyout | 2.3 | 2.5 |
| Continue to manage | 1.9 | 1.0 |
Glide Path in Place?
| YES, WRITTEN INTO IPS AS A ‘CONTRACT’ |
YES, WRITTEN INTO IPS AS AN ‘INTENT’ |
YES, BUT NOT WRITTEN INTO IPS |
NO (TOTAL) |
NO, BUT PLAN TO |
NO, AND NO PLANS TO |
|
| ALL 2015 RESPONDENTS | 23% | 22% | 25% | 30% | 15% | 16% |
| CURRENT PLAN STATUS | ||||||
| Open | 13% | 6% | 13% | 69% | 38% | 31% |
| Frozen | 24% | 16% | 30% | 30% | 16% | 14% |
| Closed | 26% | 33% | 26% | 16% | 5% | 12% |
| ENDGAME STATUS | ||||||
| Keep open/maintain | 21% | 14% | 7% | 57% | 29% | 29% |
| Close/freeze/lump sum | 18% | 18% | 30% | 33% | 18% | 15% |
| Buy-in/buyout | 26% | 13% | 34% | 26% | 11% | 16% |
| Continue to manage | 20% | 29% | 27% | 25% | 13% | 13% |
Glide Path Triggers
| WITHIN A RANGE | AUTOMATIC | |
| ALL 2015 RESPONDENTS | 60% | 40% |
| CURRENT PLAN STATUS | ||
| Open | 55% | 45% |
| Frozen | 59% | 41% |
| Closed | 62% | 38% |
| ENDGAME STATUS | ||
| Keep open/maintain | 56% | 44% |
| Close/freeze/lump sum | 70% | 30% |
| Buy-in/buyout | 66% | 34% |
| Continue to manage | 66% | 34% |
Glide Path Triggers Based On…
| FUNDED RATIO |
INTEREST RATES |
MARKET OUTLOOK |
OTHER | |
| ALL 2015 RESPONDENTS | 90% | 37% | 9% | 7% |
| CURRENT PLAN STATUS | ||||
| Open | 83% | 42% | 8% | 8% |
| Frozen | 90% | 33% | 7% | 7% |
| Closed | 92% | 36% | 10% | 8% |
| ENDGAME STATUS | ||||
| Keep open/maintain | 90% | 10% | 0% | 20% |
| Close/freeze/lump sum | 87% | 61% | 16% | 0% |
| Buy-in/buyout | 94% | 39% | 10% | 3% |
| Continue to manage | 92% | 29% | 8% | 10% |
Willingness to Re-Risk
| YES | NO, BUT HAVE BOARD APPROVAL TO ACT TACTICALLY |
NO | |
| ALL 2015 RESPONDENTS | 49% | 8% | 43% |
| CURRENT PLAN STATUS | |||
| Open | 63% | 6% | 31% |
| Frozen | 39% | 10% | 52% |
| Closed | 51% | 7% | 39% |
| ENDGAME STATUS | |||
| Keep open/maintain | 36% | 14% | 50% |
| Close/freeze/lump sum | 59% | 9% | 31% |
| Buy-in/buyout | 56% | 8% | 36% |
| Continue to manage | 47% | 9% | 43% |
Reasons to Re-Risk
| MARKET OUTLOOK |
REGULATORY CHANGE |
FUNDED STATUS CHANGES |
INTEREST RATE CHANGES |
OTHER | |
| ALL 2015 RESPONDENTS | 43% | 26% | 76% | 33% | 9% |
| CURRENT PLAN STATUS | |||||
| Open | 55% | 0% | 45% | 18% | 9% |
| Frozen | 24% | 18% | 82% | 24% | 12% |
| Closed | 50% | 42% | 85% | 46% | 8% |
| ENDGAME STATUS | |||||
| Keep open/maintain | 57% | 0% | 57% | 43% | 14% |
| Close/freeze/lump sum | 42% | 25% | 79% | 21% | 0% |
| Buy-in/buyout | 45% | 32% | 86% | 36% | 5% |
| Continue to manage | 39% | 35% | 77% | 26% | 10% |
NON-IMPLEMENTORS:
What are the inhibitors to LDI? (% “very important”)
| ALL | >$15B | $5B – $15B | $1B – $5B | $500M – $1B | <$500M | |
| Funded status | 44% | 29% | 67% | 50% | 67% | 22% |
| Interest rate environment | 58% | 43% | 100% | 60% | 67% | 33% |
| Board/staff education | 17% | 17% | 0% | 25% | 33% | 13% |
| Long-term expected return | 57% | 29% | 67% | 67% | 67% | 60% |
| No regulations forcing us | 19% | 33% | 0% | 20% | 33% | 11% |
| Short-term market outlook | 6% | 0% | 0% | 0% | 17% | 11% |
