The index reflects the asset/liability performance of a hypothetical benchmark pension plan. With the increase in November, Towers Perrin’s Pension Index is now up 3.8% from its 66.0 value at the start of 2009, but down 6% from its November 30, 2008 level of 72.9, according to a press release.
Additionally, the benchmark investment portfolio used in
the index recorded a 3.5% return for November, which pushed up the year-to-date
return to 18.1%. The index liability measure (based on projected benefit
obligations) moved up 1.7% for the month, and has increased 12.5% for the year.
In its tracking of the aggregated pension financial
results for a group of 300 large U.S. companies – the TP 300 – Towers Perrin
estimates the aggregate unfunded amount at $320 billion as of November 30,
2009, better than the $342-billion unfunded amount reported for October (see Towers Perrin Pension Index Sees Uptick in October), and slightly less than the
$339 billion unfunded that the companies reported at the close of their 2008
The updated funded status figure reflects the net impact
of a number of offsetting factors: a significant decline in discount rates
pushing up liability values, strong returns pushing up (the relatively smaller)
asset amounts and a high rate of expected plan contributions, significantly in
excess of the cost of benefits earned during the year, Towers Perrin said.