Pension Plan Funding Slips Slightly, Deficits Grow in August

By ASPPA Net Staff • September 11, 2017 • 0 Comments
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.

Measure    Aug. 2017     Dec. 31, 2016      Difference,   
  Dec. 2016-
  Aug, 2017 
  Aug. 2016       Difference,
    Aug. 2016-
    Aug. 2017
S&P 1500      82%      82%          --      77%         +5%
Wilshire Consulting      83.2%      81.9%       +1.3%        75.9%          +7.3%

Deficts Grow as Well

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.

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