USA - The year 2000 was the worst year in US pension history measured by assets versus liability growth, according to a report by Ryan Labs, the US investment adviser.
Using traditional weights based on Pensions and Investment asset allocation studies, the report indicates that pension assets had a total negative growth of 2.5% last year.
Based on Ryan Labs data going back to 1987, the year 2000 was the first negative asset growth year recorded. According to the study the poor performance on the asset side was aggravated by strong growth in liabilities due to interest rates being lowered by around 110 basis points.
Following the figures given, a surplus minded US pension fund could find itself in deficit if its surplus was less than 28% due to the negative returns and the liability growth of almost 26% last year.
Trying to find a cause for last year’s results, the report points to the fact that most asset managers run assets against generic market indices, which do not have much in common with liabilities or the risk/reward behaviour pattern.
“By losing sight of the true liability objective, several problems, if not crises, may develop,” the report concludes.
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