US - Pension plans' funding ratios fell by an average 11% in the first quarter of 2008, resulting in an overall drop of almost 24% over the past nine months, according to UBS.
Aaron Meder, head of asset liability investment solutions, UBS Global Asset Management, commented: "Since mid-2007 corporate pension plans felt dramatic swings in the equity markets coupled with volatility in the fixed income markets."
The report cited the S&P 500 index falling by as much as 13% during the quarter as a blow to pension fund investors, coupled with lower interest rates which raised the value of scheme liabilities.
UBS suggested liability driven investments could help pension funds reduce the future uncertainty without reducing expected plan returns.
The Swiss giant concluded volatility over 2007 and 2008 should encourage plan sponsors to develop hedging strategies to reduce liability risk combined with diversified return generation strategies.
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