October 10, 2011
According to a recent Pensions & Investments article, the Federal Reserve’s “Operation Twist” plan was followed by a 3.7% increase in corporate pension liabilities over the two days following the announcement, based on an analysis by Karin Franceries, executive director of J.P. Morgan Asset Management’s Strategy Group and a corporate defined benefit plan specialist. The article, published Sept. 26, 2011, covers J.P. Morgan’s analysis of the Federal Reserve’s latest move and its impact on corporate pension liabilities. “Our view is that (corporate pension funds) shouldn’t wait to de-risk,” Ms. Franceries said in the article. “The Fed shouldn’t be the trigger to not de-risk.” According to the analysis, the defined benefit plans of S&P 500 companies faced a nearly $500 billion deficit as of Sept. 22, with an average funding ratio of 73%, compared with a roughly $300 billion liability and 78% average funding ratio at the end of 2008.