Pension Plan Funding Slips Slightly, Deficits Grow in August
The aggregate funding ratios for U.S. private-sector pension plans fell slightly and deficits grew in August, say recent reports.
Wilshire Consulting says
that the aggregate funded ratio fell from July to August by 0.9% for the pension plans of Standard and Poor’s (S&P) 500 companies. Similarly, Mercer reports
that the aggregate funding level for the pension plans provided by the S&P 1500 companies fell by 1%. And Milliman says
that for the 100 largest corporate pension plans, as measured by the Milliman 100 Pension Funding Index, the funded ratio fell by 0.8%.
The firms disagree regarding why the drop occurred. Wilshire attributes the slight drop to a 1.8% increase in liabilities since July, which it notes was partially offset by asset values, which it says grew by 0.7%. Mercer says the drop in the S&P 1500 was due to a drop in discount rates, which it says the performance of mixed equity markets mitigated.
Despite the slight dip in August, funding levels for the private-sector pension plans these measures monitor remain in the plus column longer-term.
Deficts Grow as Well
|| Aug. 2017
|| Dec. 31, 2016
| Aug. 2016
Mercer notes that while funding levels remain stronger than they were last year, the aggregate deficit for the plans of the S&P 1500 has grown as well — by $28 billion since July, growing from $404 billion to $432 billion, and by $24 billion since Jan. 1.
Milliman, likewise, has reported that pension plans’ deficits worsened in August. They report that for the 100 largest corporate pension plans grew by $17 billion in August.