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Article | Global Pension Finance Watch

Global Pension Finance Watch: Fourth quarter 2020

Improved Fourth Quarter Index Results

By Nathan Pavlik and David Finn | January 22, 2021

Improvements in asset valuations during Q4 2020 drove positive fourth quarter pension index results for most regions.

Except for the Eurozone which was flat, decreasing discount rates partially or completely offset the asset gains. The overall impact of these changes resulted in positive pension index returns over the fourth quarter in North America, Switzerland, and Japan. The Eurozone was relatively flat, while the UK and Brazil saw a slight decrease over the quarter. Performance for the full year was mixed, with Japan improving significantly, Eurozone notably falling, and most regions ending the year relatively flat.

While it is always the case that Global Pension Finance Watch captures results at the end of each quarter, we particularly want to highlight the point in time view of this publication in light of the volatility during 2020. Willis Towers Watson supports the daily monitoring of pension funded status and other key pension financial metrics for those organizations wishing to inform key business decisions.

About this report

Global Pension Finance Watch, published quarterly, reviews how capital market performance affects defined benefit pension plan financing in major retirement markets worldwide, with a focus on linked asset/liability results. We cover defined benefit pension plans in Brazil, Canada, the Eurozone, Japan, Switzerland, the U.K. and the U.S. Specific plan results will vary, often substantially, based on liability characteristics, contribution policy, portfolio composition and management strategy, among other factors. The passage of time since quarter end may also have a significant impact on pension plan financing.

The impact of capital markets on these pension plans is twofold:

  • Investment performance on fund assets
  • Changes in economic assumptions on plan liabilities (as measured under international accounting standards)

If you have questions or comments about this report, please contact our Willis Towers Watson experts.

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