The state of pensions under the Trump administration

High on President Donald J. Trump’s agenda is the reform of the pensions legislation in the United States. And if the recent industry news, the moves of his allies in Congress, and his appointments to the relevant government positions are any indication, the industry is up to see important changes. Today, many pensions providers are apparently requesting that they be permitted to reduce the benefits to their planholders, because they are running out of funds. These applications have so far been dismissed, but in the event that they go bankrupt and fail to provide these benefits, the government-run Pension Benefit Guaranty Corporation (PBGC), is supposed to take care of the payments. As its mission statement goes, the PBGC “protects the retirement incomes of more than 40 million American workers in nearly 24,000 private-sector defined benefit pension plans.” Notably, however, the composition of PBGC management is very much determined by Trump: The Director will be appointed by him and then confirmed by the Senate. The Board, on the other hand, will be made up of the Secretaries of Labor, Commerce, and Treasury. And at this point, we already know who Trump’s respective nominees for the latter three posts are: a fastfood chain CEO Andrew Puzder, private equity billionaire Wilbur Ross, and former hedge fund manager Steven Mnuchin. As alumni of Wall Street and the business world, all three are likely to decide based on a framework that regards the sustainability of insurance companies’ operations as more important than their promises to planholders. On the one hand, this is likely to help insurance companies stay afloat. On the other, Americans who are eligible to apply for pension plans may no longer be too keen on getting one for themselves, worried that when their time to retire comes, they will not actually be reaping the benefits. Pension funds then need to buckle up for the next decade, keeping their operations lean and ensuring exceptional returns for the investments they make using their planholders’ money. Helping asset management firms – and their pensioner clients – deal with these changes in the world of pensions are asset servicing firms that offer cost-efficient professional middle and back office support backed by dedicated talent and state-of-the-art technologies. These asset servicing firms are also experts when it comes to monitoring and adapting to policy changes affecting the investments and securities world – changes that it seems will be very common under this new administration.