Ryan: Liabilities Widen August's Funding Gap

September 5, 2003 (PLANSPONSOR.com) - Equity market gains were not enough to overcome an increase in liabilities, as the pension asset/liability gap widened slightly in August.

August had positive returns and growth in all asset classes, but liabilities also increased, up 2.58% for the month.  This slightly reduced the 2003 improvement in the asset/liability ratio to a 13.57% gain year to date , according to data from Ryan Labs.

Since December 1999, the asset-to-liability growth rate difference (pension deficit) is now 54.26%, suggesting funding ratios below 60% for most pensions.   Ryan said that moving the funding ratio 54% to the left would cause many pension plans to fall into a deep deficit position. Like the month before, Ryan said higher contributions, earnings drag, Pension Benefit Guaranty Corporation (PBGC) premium penalties, and even solvency issues will confront America’s pensions over the next few years.

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.