Corporate Pension Funding Unchanged in May

Two consultants disagreed slightly on how corporate pensions’ aggregate funding status changed in May; but the bottom line is that funding levels remained largely unchanged.

Mercer reports that the aggregate pension funding status of S&P 1500 companies increased 1 percent over the course of the month.
Meanwhile, Wilshire said the funding ratio of the same group decreased slightly.

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Mercer reported that S&P 1500 companies saw their pension plans’ estimated aggregate funding level increase, by one percent, to 79 percent as of May 31.

However, Wilshire Consulting said that the aggregate funded ratio for U.S. corporate pension plans decreased by 0.7 percentage point by the end of May to 76.8 percent. That, said Wilshire, matched the low point over the past twelve months and brought the year-to-date decline to 4.6 percentage points.

Wilshire said that the monthly change in funding resulted from a 0.8 percent increase in liability values versus relatively flat asset values (-0.1 percent). The year-to-date decrease in funding is the result of an 8.6 percent increase in liability values.

Increasing discount rates and relatively flat equity markets were responsible for the increase, according to Mercer, which said that as of May 31, the estimated aggregate deficit of $498 billion decreased by $6 billion as compared to the end of April.

The aggregate deficit is still up by $94 billion, it added, from the $404 billion deficit measured at the end of 2015.

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