Institutional investors

The coming fall in Pension Protection Act (PPA) funding percentage June 2010 James Gannon, F.S.A and E.A. Manager, Consulting & Investment Strategy Typically, a pension plan's funded status is affected by changes in the financial markets and interest rates. Funded status is also impacted by the plan's elections for valuing assets and liabilities within the prescribed methodology. How could recent market volatility, combined with asset and liability valuation elections, impact a pension plan's funded status? This Russell Research paper answers this important question and includes: Background information illustrating how many plans calculated funded status as of January 1, 2010, Why plans will most likely have higher liabilities (the denominator in funded status calculations) due to decreasing interest rates, Why many plans will understate the market value of plan assets (the numerator), How funded status for many plans will decrease, on average, by 10% from January 1, 2010 to January of 2011, and The practical impact on pension plans. Request this research A note about our research Our proprietary research is made available to our institutional clients, and many of these published papers are available to other institutional investors as well. If you are not a Russell client, but are an institutional investor, we welcome you to request this research piece. We only require your contact information on a short request form. For more information about our research, please contact David or Gerry:     West Coast David Rothenberg Managing Director 866-926-5934 East Coast Gerry Lillis Director 866-459-4128 Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional. Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company. Date of first use: June 2010 USI-7012-06-12			Related information Request this research Russell hires practice leader, investment outsourcing Defined benefit plans Defined contribution plans Taft-Hartley plans Non-profit organizations Printer friendly version of this page