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IWS Documented News Service
_______________________________
Institute for Workplace Studies                   Professor Samuel B. Bacharach
School of Industrial & Labor Relations           Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor                    Stuart Basefsky
New York, NY 10016                        Director, IWS News Bureau
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Towers Perrin

Global Capital Markets Update - 2nd Quarter Results of Defined Benefits Pension Plans in Selected Countries [11 August 2005]
http://www.towersperrin.com/hrservices/webcache/towers/United_States/publications/Periodicals/Capital_mkt/2005_08/GCMU2005Q2.pdf
[full-text, 8 pages]

[excerpts]
This Update reviews how global capital market
performance in the second quarter of 2005 affected
pension plans in major retirement markets worldwide. We
cover defined benefit pension plans in Australia, Brazil,
Canada, the Euro-zone, Japan, the U.K. and the U.S.
The impact of capital markets on these pension plans is
twofold:
.. On fund assets as a direct result of investment
performance
.. On plan liabilities (as measured under accepted
international accounting standards) through the effect of
changes in economic assumptions.
The chart below illustrates the changes in funded status of
pension plans worldwide for the second quarter of 2005
and for the year-to-date 2005.
...
Key Quarterly Results
.. It was a weak quarter for defined benefit pension
plans around the world, with most markets
experiencing a fall in funded status.
.. Declines in long-term nominal bond yields were
severe in many markets, forcing discount rates down,
and pension liabilities to increase substantially.
.. Equity market returns were sound, mainly on the back
of improved expectations for corporate earnings and
further solid returns for energy stocks. Fixed interest
investments benefited from lower bond yields and
produced positive results.
.. Overall, the rise in pension liabilities far outweighed
the improvement in asset values in the second
quarter. The PBO funded ratios in most markets are
only within a few percentage points of the lows
experienced in 2003.
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Stuart Basefsky                   *
Director, IWS News Bureau                *
Institute for Workplace Studies *
Cornell/ILR School                        *
16 E. 34th Street, 4th Floor             *
New York, NY 10016                        *
                                            *
Telephone: (607) 255-2703                *
Fax: (607) 255-9641                       *
E-mail: smb6@cornell.edu                  *
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