Pension fund results go south.

• Author: Marshall, Jeffrey
• Position: PENSIONS - Survey

It's pretty tough to be make money in the stock and bond markets these days, and that's as true for pension funds as any other investors.

The median corporate, public and foundation/endowment plan experienced negative results for the first quarter of 2008, according to a quarterly survey of plan sponsor performance by Mercer. Capital market returns continue to decline as the sub-prime crises, increasing commodity prices and the threat of a U.S. recession weigh on investors' expectations.

According to Mercer's Summary Performance of US Institutional Portfolios survey, the median corporate plan had a first-quarter loss of 5.5 percent. Public plans and foundation /endowment funds lost 5.1 percent and 5.0 percent during the quarter, respectively.

On a one-year basis, corporate plans had average gains of 0.2 percent, while public plans and foundation/endowment plans earned 0.9 percent and 2.3 percent, respectively. Over a 10-year timeframe, all three plan types have averaged between 6.2 percent and 7.0 percent annually, Mercer reported.

Another pension study, this from Milliman Inc. of the 100 largest U.S. pension funds, found that funded status improved by $85 billion during 2007 but decreased by an estimated $62 billion during this year's first quarter.

Asset losses, coupled with decreasing interest rates during January 2008, reversed almost all of the 2007 gains, leaving funded status just below 100 percent at the end of the first quarter, Milliman concluded.

Looking back at...