The year 2000 was the worst year for pensions on record, and 2001 could even be worse, according to Ron Ryan, president of US asset manager Ryan Labs.
During 2000, pension funds assets grew by -2.5%, whilst liabilities rocketed to 25.96%. The growth in liabilities - current and future pension benefits - outpaced assets by 28.46%, Ryan said.
The 2000 asset/liability ratio is the worst on record since the introduction of the Financial Accounting Standards Board in 1987. The 2000 asset/liability ratio was more than double the previous worst year, 1995, when liabilities outstripped assets by 12.49%.
Ryan also said that 2001 would bring little relief, and could even be worse for pension funds. So far, pension fund assets are down at -3.61%, whilst liabilities stand at -1.5%. According to Ryan, concern for 2001 lies with the components of the Ryan Labs liability index. Two of the index's components, the S&P 500 and the MSCI EAFE index are currently down -8.16% and -11% respectively.
Pension fund liabilities are the number one problem in the financial world, Ryan said. Every time assets are losing to liabilities it should be front page news.
By Geoffrey Ho
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