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Alternative Market Briefing

Pensions raise concerns over the pandemic, US elections

Wednesday, October 28, 2020

Bailey McCann, Opalesque New York:

Pension plan sponsors are worried about how the pandemic and the upcoming election will ultimately impact their retirement plans, according to new data from pension consultant NEPC. Recent volatility in the market has already impacted funded status for pension plans, which could mean that trustees are forced to make some tough decisions when they consider next year's allocations.

The poll was conducted between September 9 and 30, 2020. Total estimated assets of poll respondents are over $101 billion with 64% of survey respondents overseeing more than $500 million in assets.

41% of respondents told NEPC that the pandemic represents the greatest threat to their plans. Rising healthcare costs and economic uncertainty are likely to put pressure plans that aren't fully funded. Some industry observers suggest PBGC premiums could rise in 2021, another headwind for sponsors.

The U.S. election and worries around declining expected return assumptions were next in the ranking order of most frequently cited concerns, accounting for 23% and 25% respectively. It is too early to tell what will happen with markets regardless of who wins the election, although recent analyst forecasts suggest a Biden win would be more positive for stocks than initially thought, while Trump retaining the presidency would maintain the status quo.

According to the data, a majority of large-plan sponsors-those with over $1 billion in assets-that parti......................

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