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2014 Pension Asset Return — Expected v Actual

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Pension Asset Return - Expected v Actual - 2014 all (205)During 2014, investment returns on assets of defined benefit pension plans exceeded the expected asset returns for the 3rd consecutive year. Pension asset returns have been positive for the past 6 years since the huge losses of 2008.

This chart shows aggregate global results for the pension plans of 205 U.S. companies for fiscal years ending in 2000 through 2014. Solid blue circles indicate expected asset returns included as a component of net periodic pension cost. Open red squares indicate actual investment results.

Remember, good pension asset returns during 2014 were more than offset by actuarial losses arising from remeasurement of pension obligations because of lower discount rates. So despite the favorable pension fund investment results, the aggregate global pension plan funded ratio declined during 2014, losing most of 2013’s gains in pension funded status. See 2014 Pension PBO Funded Ratio.

I continue to collect data from 10-k financial statements published by corporations for fiscal years ending in 2014, anticipating eventually reaching all of the more than 1,300 pension plan sponsors covered in my pension hobby’s studies. The general results for specific subsets of that universe might differ from the general trends seen here. For example, results for different fiscal year groupings might differ, showing the shifts discussed in my post on Pension PBO Funded Ratio for Quarterly FY Groups. I also anticipate developing subsets representing different investment policies, which obviously will display variations from the general aggregate trends. However, all larger general groups — for instance, pension plan sponsors among the S&P 500 constituents — will be showing the general trend shown here.

Meanwhile, remember my usual general cautionary note (something that keep getting forgotten or shoved to very tiny print in footnotes in most of the industry reports on this sort of info), that these numbers include pension funds for foreign pension plans maintained by some of these employers. Which I’ll sort out in future revisions to this post.

I’ll be updating this post as I continue to collect 10-k reports, retaining earlier versions of the post in backpages, as linked in the numbers at the bottom of this post, with oldest versions carrying the higher numbered links.

(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

5 March 2015 at 6:45 am

Posted in άctuary

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