SEI survey reveals contribution fears
GLOBAL - Significant losses experienced by pension funds have resulted in funding deficiencies so large that many companies will not be in a position to make the required pension contributions, a survey by SEI claims.
The company said 49% of those polled said that if their organisation was required to make the contribution, "the company could have made it but it would have had a significant impact on the overall corporate financing".
In addition, SEI had 11% of respondents saying "the organisation would not have the cash to make the required contribution".
As a result, 27% of the pension executives polled said they were diversifying out of equities and into bonds, while 21% diversifying out of equities and into alternatives.
12% were considering or had already implemented interest rate swaps and 6% were considering or had already implemented inflation swaps.
Overall, almost two thirds made changes to their asset allocation in the past year, over one third made them in the past six months and nearly a quarter made them in the past three months.
Almost two thirds of US, UK and Canada poll participants saw a decrease in funded level of at least 11%, a third said the decrease was at least 21% and 10% said it was over 31%.
76% posted losses in asset values of at least 11%, almost a half reported a loss of between 21-30% and 10% said the loss was 31-40% of the overall portfolio.
The respondents to the survey were pension executive from Canada, Hong Kong, the Netherlands, the UK and the US.
In addition, SEI had 11% of respondents saying "the organisation would not have the cash to make the required contribution".
As a result, 27% of the pension executives polled said they were diversifying out of equities and into bonds, while 21% diversifying out of equities and into alternatives.
12% were considering or had already implemented interest rate swaps and 6% were considering or had already implemented inflation swaps.
Overall, almost two thirds made changes to their asset allocation in the past year, over one third made them in the past six months and nearly a quarter made them in the past three months.
Almost two thirds of US, UK and Canada poll participants saw a decrease in funded level of at least 11%, a third said the decrease was at least 21% and 10% said it was over 31%.
76% posted losses in asset values of at least 11%, almost a half reported a loss of between 21-30% and 10% said the loss was 31-40% of the overall portfolio.
The respondents to the survey were pension executive from Canada, Hong Kong, the Netherlands, the UK and the US.
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