Karlan Tucker Reviews Pension Plans Transferring Into Annuities
Yesterday (
Athene will assume responsibilities for making the monthly payments to more than 6,000 beneficiaries of the
During the second-longest bull market in
As CEO/Founder of
Pensions & Investments also reported that in November
In a
When Tucker reviews the large gap between most pension contributions and the full funding amount for the plans, he sees a flaw even a bull market is unable to resolve.
"One of the serious issues," said Tucker, "is that pensions, in general, need a 7.5% return on investment to maintain funding levels. The market has delivered a 5.3% average annual return for the century beginning in 1900 and only 4.2% since 2000. To capture that additional 3.5%, many pension fund managers dramatically increase risk in the portfolio, which can backfire when the market dips, or worse, when a coming bear market with increased corporate bond defaults occurs, which in turn may trigger pension defaults."
"We put together a comprehensive (liability-driven investing strategy) that allows us to have our cake and eat it, too,"
Pensions & Investments reported that the
Tucker sees the trend continuing: "Annuities are instruments for protecting your premium and eventually delivering income. What corporations are now doing isn't dramatically different from what we advise our customers to do when we work on retirement plans with them. Many of the people we work with don't have a pension paying them income or a lump sum. But they can still buy an annuity that, for a lump sum of cash, guarantees monthly income for the rest of their lives. Perhaps the best part is that while they receive their monthly checks they still own and control the lump sum they invested. In an earlier version of America, this is the role pensions used to perform."
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Read the full story at http://www.prweb.com/releases/2017/12/prweb14987029.htm
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