Deals & People December 18, 2015

Manning & Napier to Acquire Rainer Investment Management

The companies expect to bring new market cap-based equity strategies to retirement plan clients, with a focus on target-date funds. 
Reported by

Manning & Napier, a provider of retirement plan investment services, is expanding its target-date fund capabilities through the pending purchase of active investment manager Rainer Investment Management.

According to the firms, the deal will allow Manning & Napier to deliver new market capitalization-based equity strategies, especially within target-date funds, described by the company as “the foundation of a broad participant menu and custom target-date products built by advisers and consultants.”

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

Officially, Manning & Napier will acquire a majority interest in the Seattle-based Rainier Investment Management LLC, which currently pilots more than $3 billion in cap-based U.S. and non-U.S. equity strategies and fixed-income products. The investment teams of both Manning & Napier and Rainier will remain autonomous, however, “and the transaction will not result in changes to either firm’s investment personnel or processes.” Rainier will continue to operate from their Seattle headquarters.

Jim Ridgeway, president of Rainier, predicts the transaction will provide greater financial, structural and distribution resources for both companies. Under the terms of the transaction, “key professionals at Rainier will maintain a 25% ownership stake in Rainier, with Manning & Napier owning the remaining 75%.” The transaction is expected to close in the first half of 2016, subject to customary regulatory approvals and closing conditions.

Manning & Napier CEO Patrick Cunningham says the firm will focus initially on expanding product solutions offered to defined contribution plan sponsors and participants. “Rainier’s fundamental approach to active management is an ideal complement to Manning & Napier’s capabilities,” he suggests.

More information is available on the Manning & Napier website. 

Data & Research December 17, 2015

Is It Time to Bump Up DB Rate Assumptions?

Nearly all plan sponsors—99%—decreased their discount rates last year, to a level that is unlikely to be reversed in 2015, because of the small change in yield curves through November 30.
Reported by

The annual pension accounting research study by SEI Institutional, in its 14th year, outlines how some plan sponsors and auditors are interpreting the events in recent years and the impact of the current economic environment. Based on this analysis, and assuming no change during December 2015, plan sponsors with a December 31 measurement date should consider increasing the discount rate they are using—but not by much, if at all.

“The yield curve increased slightly in 2015, with corporate bond indices rising 35 to 40 basis points,” says Jonathan Waite, director of the advisory team and chief actuary for SEI’s Institutional Group. “Rising discount rates will result in slightly lower plan liabilities and lower pension expense for the upcoming year. Additionally, new mortality tables might further decrease liabilities by 1% to 2% at year-end.”

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

The study analyzed a database of 625 corporate defined benefit plan sponsors, revealing a 75-basis point range of discount rates used for 2014 pension expense, a tighter range than last year’s analysis. The results of the study provide companies with guidance for setting the discount rate and return on asset (ROA) assumptions that pension plan sponsors will use for 2015 year-end disclosures.

In looking at year-end 2014 ROA assumptions, most plan sponsors (62%) had ROAs between 7% and 8.25%, as with year-end 2013. More than 90% had ROAs between 5.52% and 8.25%, the same range as last year. According to the paper, plan sponsors should be wary in using other plans’ asset return assumptions as a guide in setting their own. Rather, they should continue to look at long-term capital market assumptions as a guide, but customize the results for their asset allocations.

Data is derived from the 2014 SEI Plan Sponsor Accounting Database, which consists of data from Standard & Poor’s Institutional Market Services database, as well as proprietary analysis created by SEI’s Institutional Group. The full paper can be accessed at SEI’s website. 

«