I know what you’re thinking. First Kenny Rogers and now the Rolling Stones? Why does this guy keep quoting 1980s songs and relating them to defined benefit (DB) plans?
Well, there were two things I did during my summer nights as a teenager growing up in the ’80s that left a lifelong impact on me – listening to music and dreaming about DB plans. Didn’t we all? More on this later….
Anyway, in my last post, I introduced the idea of dynamic asset allocation (DAA) as a DB plan risk management strategy. This strategy works particularly well with hard frozen DB plans.
What does Kenny Rogers have to do with pension plans? Well, nothing really. But as I sat down to write my LDI blog post, I thought about how many plan sponsors gamble with their pension plan investments.
As I mentioned in earlier posts, the behavior of the stock market has little to do with the way a defined benefit (DB) plan’s liabilities react. Yet many DB plan sponsors make big bets by allocating a large portion of their plan portfolios to stocks— without considering plan liabilities. (After all, “You’ve got to know when to hold ’em, know when to fold ’em.”) Read more
DB or not DB? That is the question!
Okay, I’m no poet, but if I were, I might want to adapt the iconic line “To be or not to be” from William Shakespeare’s Hamlet to open the first scene of my defined benefit (DB) play. (I wonder if any of my actuary friends can act? Probably not!)
I want to discuss a topic many companies are struggling with today – whether or not to continue to sponsor their DB plan. In other words “DB or not DB”?
In my previous blog, I talked about risk as it relates to managing a defined benefit (DB) pension plan. The long and short of it is that risk is what happens when DB plan sponsors are busy making other assumptions.
Today, the combination of several factors—including market volatility, low interest rates and recent legislation—has created significant challenges for DB plan sponsors. Fortunately, the pension industry is helping plan sponsors manage these risks with a number of innovative approaches.
Sponsors of defined benefit (DB) plans face big challenges. These challenges usually happen when business (like life) doesn’t quite go as planned.
Welcome to my Defined Benefit (DB) Blog!
How do you spell DB? I probably asked myself that same question early on in my career in the retirement services business.
With so much industry attention given to defined contribution plans, the topic of defined benefit often gets thought of like that old, stodgy uncle who smells kind of funny and is generally avoided at family gatherings.
The truth is, there are a lot of exciting things happening in the world of DB. I’ve been in the retirement industry for more than 20 years, providing service to the largest retirement plan clients at the Principal Financial Group®. Currently, I manage our defined benefit operations area, and I’m excited to bring my uniquely DB perspective to this blog.