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U.S. pension funding update

BlackRock |Jul 9, 2019

Here’s the latest update on U.S. pension funding.

U.S. corporate pension funding increased 0.5% in June 2019

Image showing pension funding update for June 2019.

 

Source: BlackRock, as of June 2019

Estimated U.S. pension funded status YTD

Chart showing estimated U.S. pension funded status YTD.

 

Source: BlackRock, as of June 2019

 

Average asset allocation

Pie chart showing average asset allocation.

 

Source: BlackRock, as of June 2019

 

Asset & liability performance

Jun 19YTD
Assets 4.51% 16.07%
Fixed income 2.78% 13.46%
Equity 6.64% 17.39%
Alternatives/Cash 4.38% 20.49%
Liabilities 3.96% 13.10%
Funded Status 0.47% 2.29%

Source: BlackRock, as of June 2019

 

Liability driven investing
Our LDI platform provides defined benefit plan sponsors with the power and flexibility of one of the most comprehensive fixed income businesses in the world, combined with proprietary asset-liability focused technology.
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Expected funded status volatility increased 0.0% in June 2019

Image showing expected increase in U.S. pension funded status volatility for June 2019.

Source: BlackRock, as of June 2019

 

Expected U.S. pension funded status volatility

Chart showing expected U.S. pension funded status volatility for June 2019.

 

Source:BlackRock, as of June 2019

Asset class modeling

Assets classBenchmarkWeightExp. Vol.
Fixed income - Long Barclays Long Government/Credit Bond Index 47% 7%
Domestic equity Russell 1000 21% 15%
International equityEquity MSCI World ex US 12% 12%
Global equity MSCI ACWI 5% 13%
Private equity S&P Listed Private Equity Index 6% 17%
Real estate Dow Jones U.S. Real Estate Index 5% 13%
Cash Barclays 1-3 Month T-Bill Index 2% 0%
Liability Barclays Long Corporate High Quality Index N/A 6%

The asset class weights above, as of June 31, 2019, are based on the aggregated asset allocations on 12/31/2015 of the largest 100 US defined benefit pension plans of publicly traded US corporations. Source: Pensions & Investments
No allowance has been made for active management or costs.
Asset returns are based on the historical levels of the modeled indices above. Liability returns are based on the historical levels of the Bank of America Merrill Lynch Mature US Pension Plan AAA-A Index. Past performance is not indicative of future results. Expected liability volatility modeled as the Bloomberg Barclays Long Corporate High Quality Index.
The assumed beginning-of-2016 funded ratio is based on the average reported funding ratio of the 236 DB plans sponsored by S&P500 companies, as of 12/31/2015.
Expected asset, liability, and funded status volatility (quoted as a percent of liability value) calculated using BlackRock Solutions Aladdin risk model based on the trailing 52 weeks of equally weighted observations.