The funded ratio of Towers Perrin's hypothetical benchmark plan fell by 2.6 percentage points to 82.5% in 2005 because of increasing liabilities coupled with single-digit investment returns, according to a statement from the consulting firm. The benchmark plan's 60% equity/40% fixed-income portfolio returned 5.2% in 2005; a more conservative 40/60 portfolio returned 4.3%; and a more aggressive 80/20 portfolio returned 6.1%.
The benchmark's plan liability index, based on projected benefit obligations, increased 8.1% in 2005, "reflecting the combined impact of interest accumulation and the decrease in the discount rate" to 5.66%, down 17 basis points from year-end 2004.
The pension plan financing environment has been relatively stable for the last three years, with the benchmark plan's funded ratio ranging from 80% to 85.1%, the statement said.
