Pension Plans Hit by Funding Headwinds in 2018

The video discusses Goldman Sachs Asset Management's annual corporate pension review, focusing on the minimal change in funded ratios from 2017 to 2018 due to negative asset returns. It highlights the trend of increasing fixed income allocations in corporate pensions for better liability matching, while public pensions continue to use alternatives. The video also covers de-risking strategies for corporate plans, including shifting to fixed income, reducing equity risk, and risk transfer.

What was the primary reason for the minimal change in funded ratios of corporate pension plans from 2017 to 2018?

• Negative asset returns

• Increased benefit accruals

• Higher tax rates

• Decreased interest rates

Why are corporate pension plans increasing their allocation to fixed income?

• To maximize short-term gains

• To follow public sector trends

• To reduce regulatory constraints

• To match their liabilities more effectively

What is a key difference between corporate and public pension plans regarding regulatory constraints?

• Corporate plans use more private assets

• Public plans are not subject to ERISA

• Corporate plans have longer time horizons

• Public plans are subject to ERISA

Which strategy is NOT mentioned as a de-risking approach for corporate pension plans?

• Risk transfer

• Reducing equity exposure

• Increasing equity exposure

• Shifting asset allocation to fixed income

What is the main goal of de-risking strategies in corporate pension plans?

• To manage volatility

• To increase short-term profits

• To decrease fixed income allocation

• To expand benefit accruals