Home > Library > Stable Times > Volume 11, Issue 3  

Opportunity - It Doesn't Always Come Knocking

"Opportunity is missed by most people because it comes dressed in overalls and looks like work."
                                                                                 Thomas Edison

This month one of our articles in entitled "Commingled Funds Fuel Growth in Stable Value". I'm pleased to see that the Editorial Board is highlighting opportunities for future growth. There really are new opportunities for stable value, but they cannot be developed without some hard work. I challenge the members of this organization to take a closer look at the accounting rules that govern stable value. I think that the regulations may accommodate applications that were passed over previously or that in some cases are actually being incorporated by only a few stable value funds already. I am stating the obvious when I say that nobody likes to risk their own time and resources so that their competitors can benefit at no cost to themselves. That is why it is not surprising to find that when a new application is uncovered, it often takes some time before it becomes widely known. You may also find that there are new fields that offer fresh opportunities within traditional defined contribution plans, and possibly in other benefit plans. Stable value's risk-reducing features do not always have to be limited to pension savers.

I applaud the asset managers who have started to use stable value funds as the fixed income component of asset-mixed funds. They are providing a better investment for plan participants. Of course, this is difficult to achieve when a plan sponsor has chosen an existing asset-mixed fund. But for those trustees who individually select the best fixed income and equity managers themselves, this is an option - and one that adds true value.

I am curious to know whether the members of the SVIA have an opinion on Other Post Retirement Benefits (OPEBs) as a candidate for stable value funds. As many of you already know, OPEBs are essentially non-pension retiree benefits, such as medical, dental, life insurance, and disability. Funding for these benefits can take two forms, one of which may qualify for stable value accounting. As with the pension sector, OPEB accounting has evolved rapidly. I am not aware of any overt requirement to fund OPEBs, however, many employers who provide these benefits to their retirees will soon find it necessary to reflect them in their financial statements. Liabilities will be shown on the plan sponsor's balance sheets while expenditures and amortized funding shortfalls will be recorded on their income statements. The pressure from employees, the rating agencies, and the media, to remedy any funding shortfalls will almost certainly rise - and quickly.

I hope that we do take the time and expend the energy to see whether we can help someone by developing this opportunity - or any of several others. Sometimes it just takes some work to open the door to opportunity.

Access all past issues of Stable Times in Our Library.