Contributing to the overall decline was the multiemployer universe’s 22.7%-median loss on equity investments for the funds, compared to a similar 22.1%-drop in the S&P 500. Even more startling was the size of the decline even with the fourth quarter’s equity investments gaining 7.2%, according to Segal Advisors’ annual Survey of the Universe of Multiemployer Pension Funds’ Investment Performance .
However, a 10.1% return for fixed income helped buoy the overall results, which kept pace with the Lehman Aggregate Bond Index’s 10.2% return. This positive return was not enough to offset equities’ poor showing though. “Improved fixed-income returns in 2002 were overwhelmed by the year’s substantial equity losses, resulting in combined median loss [that]…. was more than three times as large as the 2.4% loss on combined returns in 2001,” the Segal reported noted.
For these plans, 2002 marked the third consecutive year of negative equity returns and the second year these investments have returned double-digit losses. Over the three-year period, the median equity loss for multiemployer plans was 13.9%, approximately 70 basis points less than the 14.5% loss experienced by the S&P 500.
True to form for the year, over the same three-year period, funds were leveled out by the 9.9% median gain on fixed-income investments. This was only slightly below the 10.1% three-year return of the Lehman Aggregate benchmark.
The latest Segal multiemployee results correspond to an earlier survey that fully funded levels had declined to 67% in 2002 from 83% in the prior year. This rate represents the lowest percentage in seven years and is only slightly higher than the 65% of plans that were fully funded in 1983, the first year of that Segal study (See Multiemployer Pensions See Further Funding Erosion ).
For a copy of the most recent report, please visit: http://www.segalco.com/ .