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FYE 9/30/2008 Pension Investment Return

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For S&P 500 companies with fiscal years ending September 30, the aggregate actual rate of return on assets for global defined benefit pension plans as of the end of the 2008 fiscal year was approximately -7.90%, a year of negative pension investment return after five consecutive years of positive return. Since these companies’ fiscal years ended before the worst investment losses of 2008, experienced during October and November (see, for example, the APM), the 2008 rate of return for the majority of S&P 500 companies, for which the fiscal year will end on December 31, will be even worse unless the investment markets recover significantly during December. Recent historical experience for the FYE 9/30 subset –

  Fiscal Year Ending   Actual Rate of Return
  9/30/2008   -7.90%
  9/30/2007   13.97%
  9/30/2006   9.13%
  9/30/2005   11.69%
  9/30/2004   12.90%
  9/30/2003   6.14%
  9/30/2002   -6.38%

Among the subset of S&P 500 companies with fiscal years ending September 30, every single company had a negative rate of return on pension assets for the year ending in 2008. The company with the worst pension investment return was Franklin Resources, with an estimated -18.99% rate of return, while Rockwell Collins was close behind at an estimated -18.53% rate. The company with the best pension investment return was Walt Disney, with an estimated -0.77% rate, with all other companies worse than an estimated -3% rate.

For this summary, rates of return are calculated via the formula used for the Form 5500 (although of course technically a pension plan’s Form 5500 and the corporation’s 10-k financial report are separate and independent).

(Remember, as I’ve previously disclaimed, posts such as this represent efforts of my favorite pastime. My formal work does not involve any of this, and none of it represents any position or comment that should in any way be attributed to my employer. Likewise, as always, it represents general personal impressions and should not be treated or used as formal professional advice.)

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Written by macheide

30 November 2008 at 2:40 pm

Posted in άctuary


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