U.S. non-profit health-care organizations' pension plans and operating funds had significantly lower returns in 2004, according to a new Commonfund survey. The average return of the defined benefit plans of the 197 non-profit health-care entities surveyed was 10% in 2004, compared with 18.1% in 2003, according to the Commonfund Benchmarks Study. The plans' average annualized return for the three years ended Dec. 31 was 6.9%, and 4% for the five-year period. The average actuarial assumption for 2005 is 7.7%. Commonfund's study universe of non-profit health-care companies controls $37 billion in defined benefit plan assets.
The average 2004 return for the companies' combined $91 billion in operating funds was 8.2%, compared with 14.1% in 2003. The average annualized returns for the three and five years ended Dec. 31 were 6.3% and 4%, respectively. The average actuarial assumption for 2005 is 5.5%.
For both pension and operating funds, 40% of the companies surveyed allocate assets to marketable alternatives (hedge funds), ranging from a 59% allocation by institutions with assets of more than $1 billion to 26% by entities with assets between $50 million and $100 million.