Year-to-Date Global Pension Fund Returns Total $4T

November 14, 2008 ( - Pension fund returns fell by more than 20% on average between January and October - a loss of $4 trillion in pension assets across the Organization for Economic Co-operation and Development's 30 member countries.

Markets Media Online reports that both defined benefit and defined contribution systems were badly affected, according to OECD data. Among defined benefit systems, the main concern is that funding levels have dropped between 5 percentage points and 15 percentage points, depending on the discount rate.

The Organization expects worse performance numbers will be reported at the end of the year.

Korea and Luxembourg were the least affected areas, according to the news report. The biggest losses are likely to hit Ireland, the U.S., and the Netherlands, which are the countries with the highest exposure to equities as a percentage of total assets.

An OECD report said: “From a financial stability standpoint, one major concern is that pension funds in some countries are reacting by selling part of their equity portfolios, putting further downward pressure on equity prices,” and that “fair valuation methods and quantitative risk-based valuation seem to be partly responsible for this pro-cyclical behavior.”