Pension Plans’ Investments Perform Well in 2020 Despite Market Turmoil

Investment returns are an important part of the ability of pension plans, including the Directors Guild of America-Producer Basic and Supplemental Pension Plans, to pay promised benefits. Surprisingly, and contrary to early and mid-year forecasts, the Plans’ investments ended 2020 very well, despite the COVID-19 pandemic—enough for the Board of Trustees to approve a 13th check for retirees and beneficiaries in the Basic Plan.

During the first months of 2020, as the world became increasingly aware of COVID-19, investment returns across all asset classes predictably reflected the economic stress of worldwide business lockdowns and rapid job losses. As Congress and the Federal Reserve began providing fiscal and monetary support, asset prices began to stabilize, and bonds began to recover.

During the last quarter of 2020, increased economic activity, the prospect of an effective vaccine program and government stimulus brought significant asset price recovery. The result: Significant 4th quarter price appreciation across several asset classes, resulting in total year-end returns of 12.4% for the Basic Plan, and 11.5% for the Supplemental Plan, which has a lower risk profile due to its shorter investment horizon as compared to the Basic Plan.

The Basic and Supplemental Plans’ investment strategies are designed for longevity and stability, so that the Plans are better positioned to persevere extreme market changes like those experienced in 2020. While this does not guarantee future performance, the Basic and Supplemental Plans’ ability to withstand 2020’s volatility is attributable in part to the continued oversight and thoughtful planning by the Finance Committee of the Board of Trustees, pension consultants and investment managers.

To learn more about the Plans’ Investment Program, including monthly investment return updates, visit the Pension Plans’ Investment Program pages.