pension plans faced losses in second quarter of 2012
Continued low long term interest rates and weak equity markets combined to wors fake rolex en the solvency position of Canada’s pension plans during the recently ended secon fake rolex d quarter, according to a study released Wednesday by Mercer, an international pension consulting firm.
“After a punishing 2011, pension plans were making a slow but steady recovery in the first four months of 2012. However, plummeting bond yields and weak equity markets in May more than reve fake rolex rsed the gains in the first four months of the year,” said Manuel Monteiro, a Partner in Mercer’s Financial Strategy Group. For the sixth months of 2012, Monteiro said that “most plans are now roughly back to where they started the year.”
For the quarter, drops in long term federal bond yields caused the index to drop by 4% while weak investm fake rolex ent returns added another 2% reduction. The only positive was deficit funding by employers which contributed a positive 1% to the index.
As for solutions, Monteiro said that companies “need to measure the risks they face and develop comprehensive strategies to take some risk off the table.”
While that strategy may be too expensive in the short term, “mapping out a longer term strategy will allow sponsors to act decisively as de risking opportunities arise. A comprehensive risk management strategy could involve changes to plan design, investment strategy and funding policy, as well as risk transfer opportunities such as annuity buy outs, annuity buy ins and longevity insurance,” he said.