Investing July 7, 2003

Resurgent Equities Narrow Funding Gap in June

July 7, 2003 (PLANSPONSOR.com) - Resurgent equity markets helped narrow the pension asset/liability gap in June, according to Ryan Labs.

Reported by

Nevin E. Adams

Ryan Labs noted that an 8.80% gain in assets, coupled with a 7.70% increase in liabilities, brought the asset-liability funding ratio to -66.80%, compared with -67.83% a month ago (see Ryan: Pension Liability Back In Red For May ). That reading suggests a funding ratio below 60% for most pensions, according to Ryan.

Bonds had their worst month of the year with negative returns (Lehman Aggregate = -0.20%), while long bonds as demonstrated by liabilities had a negative growth of -2.73% for June, according to Ryan. That was a marked turnaround from the prior month, where liability growth outpaced a strong equity performance.

Ryan’s data is based on roughly $200 billion in assets tracked in its Custom Liability Index system. Ryan put the first liability index together in 1991.