US - The overall funding position of US corporate defined benefit (DB) pension plans rose during the first quarter of 2009, according to UBS Global Asset Management.
UBS Global Asset Management head of Americas asset liability investment solutions Aaron Meder said despite equity markets declining 11% during the first quarter, liabilities also fell, leading to an overall increase in funding positions.
Meder said: "As plan sponsors consider implementing an interest rate hedging approach, it is imperative that they have a strategy in place to implement the hedge as a function of interest rate, funding ratio and calendar triggers."
UBS said the rise was due to higher discount rates being used, leading to lower values for pension liabilities.
Meder added: "As interest rates begin to increase, plan sponsors should add duration to their portfolios via long duration bonds and/or interest rate derivatives to lock in their funding ratio gains (as the present value of liabilities fall faster than the value of assets) while reducing funding ratio risk."
Separately, press reports indicate several senior UBS managers based in Switzerland who deal with foreign clients in the wealth management division have been banned from leaving the country over fears they may be arrested or detained as part of ongoing US tax evasion and fraud investigations.
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