Read more: Will defined benefit pension plans face headwinds in 2022
Overall, though, he isn’t seeing any alarm bells.
“If we are going into a recession, in past recessions, central banks have cut the interest rates, which will increase plan liabilities at the same time that plan assets are going down. So, the financial position would deteriorate with all that fall out, and some plans may go into a deficit, which may trigger additional contribution requirements from plan sponsors at the time that the economy is not doing well, and they may not have the cash on hand to put into the pension plan,” he said.
Advisors could also help business clients review their expenditures at this time to tighten their belts.
“Most DB plans are in good shape,” he said. “So, we’re not saying the sky is falling. We’re saying there are clouds that may just dissipate, or they may get darker. Right now, we don’t know. We just cannot say that everything’s hunky-dory.”
