US - The US state pension funds have developed gross unfunded actuarial accrued liabilities (UAAL) of nearly $300bn in just four years, a report by Standard & Poor's has found.
While in 2000 state funds had little or no unfunded liabilities, with the exception of certain historically weak plans, the UAAL had rocketed to $284bn by June 30, 2004 - the latest figures available.
Divided on a state-by-state basis, that equated to a mean UAAL per capita of $1183, the report found.
Average state pension funding levels, as of June 30, 2004, had fallen to approximately 84% from their previous apex four years earlier.
The situation is beginning to rectify itself, as public pension funds on average exceeded their investment return assumptions for both fiscal years 2004 and 2005.
But due to the fact that around 60% of large public funds use five-year smoothing to value assets, the large investment losses felt in 2001 and 2002 were still taking their toll on those systems in the June 30, 2005 actuarial valuations, said Standard & Poor's credit analyst Parry Young.
The risks to such a scenario, in addition to the potential for investment return shortfalls, include a number of factors that affect funding, such as changes in actuarial assumptions, benefit levels and demographics, he added.
According to the report, funds will be fully out of the woods from these losses after fiscal 2006.
By Damian Clarkson
Mark Evans has been appointed as a director at Independent Trustee Services (ITS) to lead trustee appointments in London.
The Pension Protection Fund (PPF) is consulting on changes to the actuarial assumptions it uses in valuations in a bid to better reflect the bulk annuity market, with schemes set to move into surplus on aggregate.
Private sector defined benefit (DB) schemes were 96.3% funded on a Pension Protection Fund (PPF) compensation basis at the end of July, according to the lifeboat fund's monthly index.
Conduent has completed the sale of its actuarial and human resource consulting business to private equity investor, H.I.G. Capital.