Funded pensions are recovering from the crisis. While the investment losses suffered in 2008 have not been fully recouped, two key variables - investment returns and funding ratios in defined benefit plans - improved in the first half of 2009.
Pension funds staged a partial recovery in the first half of 2009, generating investment returns of 3.5 per cent in nominal terms. But, as of 30 June 2009, total pension funds assets have still remained 14 per cent below their December 2007 levels, according to the latest edition of OECD Pensions Markets in Focus.
For the OECD as a whole, in the first half of 2009, funded pension arrangements recovered USD 1.5 trillion of the USD 5.4 trillion in market value that they lost in 2008.
Thanks to the stock market rally in emerging markets, some non-OECD countries have already largely made up their 2008 investment losses. By the middle of the year, Chilean pension funds had largely made up their 2008 losses, while assets of Israeli pension funds were above their December 2007 level.
Another performance indicator showing a marked improvement is funding ratio of defined benefit pension plans. The average funding level for OECD defined benefit pension plans went up from a 24 per cent deficit at the end of 2008 to an estimated 18 per cent deficit by June this year. Funding levels improved thanks to both investment gains and higher discount rates.
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OECD pension funds 43943964.pdf
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