US - Continuing weakness in the global economy and deleveraging of the US financial system could hurt pension funds further, according to BNY Mellon Asset Management.
Peter Austin, executive director, BNY Mellon Pension Services, said: "These factors, along with the uncertainty of energy prices and energy policies, could dampen the equity markets and lead to higher interest rates.
"It is difficult to determine whether the resulting decline in liabilities will more than offset sluggish or non-existent gains in asset values," Austin added.
The company said the average US pension scheme's funding status had fallen 4.8% in June with a total 3.75 over the year to date.
However, UBS Global Asset Management's US Pension Fund Fitness Tracker found funding levels had improved over the quarter as a whole from 90% to 93% after falling 11% in Q1 2008.
Aaron Meder, head of asset liability investment solutions in the Americas, UBS Global Asset Management, agreed the end of the quarter had been tough: "Investor sentiment picked up in the beginning of the quarter as the 'doom and gloom' scenario for the economy seemed to be overblown.
"However, a higher than expected May unemployment number and a pick up in inflation, driven by surging commodity prices, caused an increase in investor risk aversion during June," Meder added.
UBS said pension fund liabilities had been driven down by around 4% over the quarter, with BNY Mellon estimating a 0.2% fall had occurred in June.
Trustees and pension fund investors should be encouraged by this recent volatility to turn to liability driven investment (LDI) strategies, according to UBS.
The Swiss bank advocated the use of a hedging strategy which reduced liability risk whilst developing a well diversified return generation strategy with less equity benchmark orientation.
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