U.S. Corporate DB Pension Plans — Today’s Challenges

January 08, 2016
  • Contributors:

    Martin L. Leibowitz, Antti Ilmanen
  • Topic:

    Portfolio Management

The Journal of Retirement

This article, coauthored by asset-liability-management pioneer Marty Leibowitz of Morgan Stanley and Antti Ilmanen of AQR Capital Management, analyses the many challenges U.S. corporate sponsors face when making decisions about their defined benefit (DB) pension plans.

The authors first examine why corporate sponsors may have closed their DB plans, despite their many benefits. The rising size of pension obligations, challenging market developments (particularly the trend decline in bond yields), and accounting and regulatory changes have combined to make DB plans’ funding status more volatile and problematic.

Leibowitz and Ilmanen then discuss challenges and best practices for underfunded plans when the plans’ managers make their asset class-allocation, duration-matching and contribution decisions.



  • The information contained herein is only as current as of the date indicated, and may be superseded by subsequent market events or for other reasons. The views and opinions expressed herein are those of the author and do not necessarily reflect the views of AQR Capital Management, LLC, its affiliates or its employees.

    This information is not intended to, and does not relate specifically to any investment strategy or product that AQR offers. It is being provided merely to provide a framework to assist in the implementation of an investor’s own analysis and an investor’s own view on the topic discussed herein. Past performance is not a guarantee of future results.

  • The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of AQR Capital Management, LLC (“AQR”), its affiliates or its employees, or Morgan Stanley or its employees. AQR and Morgan Stanley are not affiliated. This information is not intended to, and does not relate specifically to any investment strategy or product that AQR or Morgan Stanley offers. It is being provided merely to provide a framework to assist in the implementation of an investor’s own analysis and an investor’s own view on the topic discussed herein.