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The effect of inflation on retirement savings/income – conceptual issues – first quarter 2022 update
The effect of inflation on retirement savings/income – conceptual issues – first quarter 2022 update We are (concurrently) publishing an update to our article analyzing the effect of inflation on retirement income to include data through the first quarter 2022. This is an update to our more technical article, discussing, generally and theoretically, the issues of increased inflation/inflation risk present for both DB and DC plans.
Retirement income and inflation – April 2022 update Until 2021, the main drivers of retirement finance/retirement income were interest rates and asset performance. The other variable affecting nominal performance, mortality, has been (and is expected to continue to be) relatively stable.
Market volatility doesn't deter Plan Sponsors from derisking as the PRT market remains very active.
October Three Pension Risk Management Team analyzes using annuity purchases to lower pension plan costs in 2022.
Overhead costs have skyrocketed for sponsors of traditional defined benefit plans. The main component of the skyrocketing cost is the insurance premiums paid to the Pension Benefit Guarantee Corporation (PBGC). The PBGC premiums are a combination of a fixed per participant fee and a variable rate based on the amount unfunded but capped at a per participant maximum. These components have grown greater than 200% for the fixed and 500% for variable rate since 2012.