OECD Pensions Remain Nearly 10% Below Pre-Crisis Levels

(July 14, 2010) — Research by the Organisation for Economic Co-operation and Development (OECD) has revealed that pension fund assets still remain below pre-crisis levels.

The Paris-based organization said in its July Pension Markets in Focus report that pension funds in OECD countries recouped about $1.5 trillion of the $3.5 trillion in market value they lost in 2008, spurred by rebounding equity prices last year. Still, assets remain about 9% below December 2007 levels.

The research shows that some countries have already recuperated completely from 2008 losses, including Austria, Chile, Hungary, Iceland, New Zealand, Norway, and Poland. Overall, Hungary saw the biggest returns of all European countries with 22%, followed by the Netherlands with 18% and Turkey with 17.1%.

“Despite these positive outcomes, funding levels for pension funds were still significantly lower at the end of 2009 than two years previously,” the report stated. The median funding deficit (the gap between assets and liabilities) for pension funds in OECD countries was 26% at the end of last year, compared with 23% a year earlier and 13% in 2007. Despite the positive news for some countries, OECD states have still only recovered around 40% of all losses made in 2008, with $2 trillion still to be regained.

Additionally, the study showed public funds have recovered losses because of a more conservative investment strategy. Assets in public pension reserve funds across OECD nations were $4.5 trillion, a 7.3% increase from the end of 2008.