Pension Pulse – Special Edition (J.P. Morgan)

June 2013

KEYWORDS: pensions, defined benefit pension, Private Pension, Public Pension, unfunded liability, assumed rate of return, asset allocation, buyout, risk management, down-side risk


JP Morgan Strategy Group

  • JP Morgan

After a frustrating 2012, with solid asset returns wiped out by liability increases amid declining rates, things may have turned around in 2013. The funded status of “Corporate America” improved over 9% from year-end 2012 through the end of May 2013 from 77% to 86% (Exhibit 1). A strong run in equity markets—up 15%—led to an 8% increase in assets, a rise that tops the universe’s median expected return on assets of 7.4%. Aggregate liabilities have decreased year-to- date (by 4%), as one would expect given rising interest rates.

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