Towers Pension Index Edges Up in July

August 12, 2009 ( - The latest Towers Perrin Pension Index was up 1% in July to 67.6 with the impact of robust portfolio returns tempered by a significant bond yield decline.

A Towers Perrin news release about its data said the July index showing represents a 2.4% increase for the year to date, but a decline of 23% over the past 12 months. The index reflects the asset/liability performance of a hypothetical benchmark pension plan. 

Strong equity returns in July, a continuation of the pattern established during the March-May period, drove the increase in the index, Towers Perrin said.

The benchmark investment portfolio saw a 5.4% return for July and has returned 9.5% for the first seven months of 2009.  The liabilities used in measuring the index (based on projected benefit obligations) rose 4.3% in July and are up 6.1% for the year to date.

According to the news release, the company’s separate tracking of aggregated pension financial results for a group of 300 large U.S. companies found virtually no change in the aggregate funding status for the 300 companies since the close of the prior fiscal year. This result represents the net impact of a number of offsetting factors: a 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 service costs.