Milliman study: five years of earnings pension company disap

 

Tuesday, Mar 24,2009, 10:27:59 PM   Click:

SEATTLE, March 24, 2009 / PRNewswire via COMTEX / --
Milliman study: five years of earnings pension company disappeared in 2008
- Plan assets invested in equities fell from 55% to 44%
SEATTLE, March 24, 2009 / PRNewswire via COMTEX / --


Results of the 9th Annual Milliman pension fund studies show the financial crisis has become increasingly negative impact on pension funds of the Milliman 100 companies last year. The financial situation of the nation's largest defined benefit pension plans registered record losses - over $ 300 billion - in 2008, wiping out gains from all previous five years. According to study co-author John Ehrhardt, "the loss of assets have a decrease in capitalization of approximately 106% at the end of 2007 to less than 80% at the end of 2008. Losses continued in 2009 with more than $ 30 billion drop in funded status in the first two months. At the end of February, "Ehrhardt noted," the financial position of the Milliman 100 pensions was 74%, the lowest level since May 2003. "

The loss of capitalization in 2008, is expected to produce an increase in pension expense for 2009 and a burden on business income of over $ 70 billion. Employer contributions to pension plans 100 Milliman increased slightly in 2008 ($ 29.7 billion against $ 27.2 billion in 2007). The losses in funded status during 2008, coupled with the new funding requirements under the Privacy Act of pensions are projected to increase required contributions to over $ 50 billion for 2009.

The percentage of pension plan assets invested in equities fell from 55% to 44% in 2008. "The decrease in allocation of funds is mainly due to lower market and, to a much lesser extent, a change in investment policies," said co-author of study by Paul Morgan of the Evaluation Associates (EAI). "The return to an allocation of 55% by the end of 2009, through new investments or rebalance the portfolio will be $ 100 billion of investments in markets actions, "said Morgan.

The 9th annual pension fund Milliman study is available for download on www.milliman.com.

For those who wish to discuss the study with co-authors, John W. Ehrhardt, FSA, EA, of Milliman, and Paul C. Morgan, CIMA, Evaluation Associates, will host an hour-long interactive Web session on Wednesday, March 25 at 3:00 PM EDT. For access to information and instructions, please contact Diane.Loehr @ milliman.com.

Milliman's Pension Funding Study is based on pension plan accounting information disclosed in the annual report of 100 footnotes of the largest pension sponsors, assets by the year 2008 and prior years. These figures represent the GAAP accounting information public companies are required to report under Statements of Financial Accounting Standards 87, 88, 106 and 132. They do not reflect the financial position of the United States qualified pension under ERISA.

About Assessment Associates

Evaluation Associates a Milliman Company, is a leading, full service investment advisory firm. Established for over 32 years, Evaluation Associates is located in Norwalk, Conn., and serves more than 125 institutional investors with over $ 300 billion in assets. Our clients include public corporations and pension funds, foundations, endowments, religious organizations, hospitals, organizations and financial services. For more information, visit www.evaluationassociates.com.

About Milliman

Milliman is among the world's largest independent actuarial and consulting firms. Founded in Seattle in 1947 as Milliman & Robertson, the company currently has 49 offices in key locations worldwide. Milliman employs over 2000 people, with a team of more than 1,000 qualified consultants and actuaries, specialists, including from clinicians to economists. The firm has consulting practices in healthcare, employee benefits, property and casualty insurance, life insurance and financial services. Milliman serves the full spectrum of business, finance, government, unions, education and nonprofit organizations.