2001 Could Be Worst Year in Pension History

The year 2000 did not bring positive results in the pension assets versus liabilities equation--and 2001 may be even worse, according to Sean McShea of Ryan Labs, a financial services research company based in New York. According to the company, assets lost significant ground to liabilities on an annualized basis. The growth in liabilities (current and future retiree benefits) outpaced assets by 26%.

The year 2000 did not bring positive results in the pension assets versus liabilities equation--and 2001 may be even worse, according to Sean McShea of Ryan Labs, a financial services research company based in New York.

According to the company, assets lost significant ground to liabilities on an annualized basis. The growth in liabilities (current and future retiree benefits) outpaced assets by 26%.

These numbers are the worst since the Financial Accounting Standards Board was established in 1987. The 2000 figure is more than double the previous worst year in 1995, when the pension asset/liability ratio stood at 12.49%.

“From 1996 to 1999, we were doing OK, but 2000 was the problem child,” McShea says. And he refuses to paint a rosier picture for 2001.

“It actually looks as if 2001 will be worse,” McShea says. “One of our key components [in the asset allocation model], the S&P 500, is down 11%. This is only a snapshot for traditional plans, and everyone has different term structures and liabilities.”

Editor's note: For any comments regarding this article, or to suggest a story idea for RR Online or Registered Representative magazine, contact Editor in Chief Dan Jamieson at [email protected], Online Editor Rick Weinberg at [email protected], Online Managing Editor Cheryl Cooper at [email protected] or Senior Editor Michael Hayes at [email protected]

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