March 16, 2010 — PlanSponsor reports on NIRS’ analysis suggesting that passage of the Pension Protection Act of 2006 led private sector plan sponsors to turn away from equities during the economic downturn and not reap the benefits of the market recovery.

Companies have attempted to reduce the volatility of the investments in their plans by turning away from equities and embracing “fixed income” investments, and many have closed or frozen their plans, which also causes a shift from equities as frozen plans require greater liquidity and a move from long-term investments.

This imposes a significant cost in the foregone opportunity to earn better returns that could have come with a better balanced portfolio,” NIRS concludes.

Read the full article here.