Pension Indices: February 2022
The Pension Indices by LifeWorks, released monthly, condense the journey that pension plans have experienced during the year into a few key statistics. More importantly, they also provide an early indicator of the challenges and opportunities that are yet to come for plan sponsors and administrators to help with the monitoring and management of their pension plans.
- Over the month of February, the funded position of a typical pension plan improved slightly on both a solvency and accounting basis.
- Investment returns were -1.2% for the month for a representative pension plan portfolio. Among several risk factors, which include the war in Ukraine, concerns about inflation and expectations of future rate hikes by central banks, global equity markets as well as bonds continued to pull back in February.
- Corporate credit spreads increased by approximately 0.10% to 0.15% during the month.
- Market expectations for long-term inflation remain largely stable during the month.
- The accounting pension expense index continues to register a significant fall in next year’s pension expense, largely driven by bond yield increases since the beginning of the year.