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Pension Funded Status Up to 111%?!!

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mvapbo-1130-20042008Yes, for the small subset of S&P 500 companies with fiscal years ending November 30, the aggregate funded status of global pension plans bucked the economic meltdown and the dire doomsday forecasts for the pension universe. As indicated by this chart for the end of fiscal years 2004 through 2008, not only did pension assets (blue diamonds) remain almost level, but projected benefit obligations significantly declined. The result: for the November subset, funded status increased from 94% at the end of 2007 to almost 111% at the end of 2008!

Credit Morgan Stanley, the elephant of this subset, for most of the positive trend. Morgan Stanley is one of the few companies whose pension plan is invested 100% in bonds and other fixed income securities, so their rate of return on pension assets during 2008 was nearly 10% – positive 10%, that is!!! Far far better than the red that most pension plans will be reporting for the year.

So yes, 2008’s aggregate numbers for the entire S&P 500 universe are still going to be pretty bad. But the bad news won’t be unanimous. And because many companies were at least cutting back their equity exposure before the worst of 2008 hit, even the aggregate results likely won’t be as bad as predictions being published have been warning.

(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 January 2009 at 3:50 pm

Posted in άctuary


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