According to a UBS press release, the typical U.S. pension fund started the year with a funding ratio of approximately 101% and ended the quarter substantially weaker at approximately 90%. This follows a funding ratio drop of 12% in the second half of 2007.
UBS said the decrease is mostly attributable to volatile equity markets that ended the quarter down, decreasing pension fund assets, and lower interest rates which increased the present value of pension liabilities.
Aaron Meder, UBS Global Asset Management’s Head of Asset Liability Investment Solutions in the Americas, said in the release: “The month of January dealt a massive blow to funding ratios, a decline of nearly 8%, which was the sharpest, single-month decline in funded status since December of 2002.”
align="center"> UBS US Pension Fund Fitness Tracker of Typical US Corporate Plan Funding Ratio