The recent market volatility has been striking, so much so, pension consultants are already warning about a return to the funding and solvency issues of just a few years ago.
Late last week Towers Watson consultant, the well-known Ian Markham, suggested that record low bond yields are combining with falling stock markets to put pension plan sponsors “on course to revisit some of the financial anxiety of the recent past.”
It was not long ago the business pages of the paper were filled with a regular stream of stream of stories fretting about the sustainability of pension plans. Funding levels were too low. Returns were not delivering amounts that had been assumed. Those worries seemed to evaporate over the last two years as markets recovered. But the concerns are back, apparently.
“Market upheaval could cause some pension plan sponsors to pause and re-assess their funded status and de-risking strategies,” said Markham in a recent communique from the company. Strong markets in the first half of the year had absolved worries for some time. But with declines settling in Markham says he expects pension solvency to become an issue by year-end at many companies with defined benefit pension plans.