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U.S.
pensions lost $1 trillion in last 3 years NEW YORK, Feb 28
(Reuters) - U.S. retirement plans for public employees, corporate pensions
and endowments lost $1 trillion in the last three years after being hammered
by poor stock returns, a survey released on Friday said. The three-year loss --
equal to China's GDP last year -- was "probably the most destructive in
the whole history of the U.S. fund business," Greenwich Associates
consultant Dev Clifford said in the survey released by the consulting and
research firm. The miserable state of
the stock market, coupled with pensions paying out more than they are taking
in as healthier Americans live longer and collect more benefits, crippled
the 1,729 pensions and endowments surveyed between 2000 and 2002. Assets dropped to $5.1
trillion at the end of 2002 from $6.1 trillion in 2000, or 17 percent,
Greenwich said. Fund managers
interviewed say the worst days are over, according to Greenwich managing
director John Webster, "although a lot say that does not take into
account the Iraq situation -- which is concerning a lot of people." Losses aside, fund
professionals' pay actually rose, climbing on average $6,500 to $124,100
last year. Bonuses, however, dropped on average $1,100 from 2001 to $29,900
in 2002. Greenwich estimated
the $1 trillion loss after finding the 380 corporate pensions, 199 public
plans and 125 endowments from which it collected results in each of the last
three years lost $730 billion. The 704 funds ended last year with $3.01
trillion dollars. Using the 704 funds'
data as a base, Greenwich estimated that all 1,729 retirement and endowment
funds lost $1 trillion. Corporate pensions
took the biggest hit, falling 23 percent since 2000, while public pensions
ended the last three years down 18 percent. Endowments and
foundations, like those run by Yale University and the Ford Foundation,
fared better as a group, sinking just 9 percent. Beyond poor investment
returns, many retirement systems and endowments sank because of wrong
assumptions made about how long retirees will live and how much money will
be needed to pay them. Pensions predict how much money they will need down the road, based on the length of time they expect retirees to live once they stop working. Copyright ©
2002 Global Action on Aging
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