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Towers Perrin: Pensions Gain

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Investment market gains probably helped the typical large defined benefit pension plan do a little better in May.

The “funded ratio” at a typical plan was 0.5 percentage points higher at the end of the month than at the beginning, according to consultants in the Stamford, Conn., office of Towers Perrin Forster & Crosby Inc.

A typical large pension plan may have ended May with about 69.7% of the assets needed to cover pension obligations, Towers Perrin estimates.

The funded ratio is up from a low of 60.2% in February, but still considerably lower than the mid-2008 level of about 90%, the firm says.

Towers Perrin actuaries gauge pension plan health by estimating the performance of a hypothetical benchmark pension plan that invests 60% of its holdings in stocks and 40% in bonds and other fixed-income instruments.

The benchmark plan enjoyed strong investment gains in May, but falling corporate yields pushed up its benefits liabilities, Towers Perrin reports.