Funded status of S&P 1500 pensions held steady in October

By BenefitsPro

By Paula Aven Gladych

The funded ratio of pension plans sponsored by S&P 1500 companies remained stable in October at 91 percent, according to Mercer.

This funded ratio corresponds to a deficit of $185 billion as of Oct. 31, 2013, up slightly from $182 billion a month ago, Mercer found. This is a significant reduction from the estimated deficit of $557 billion as of Dec. 31, 2012.

Despite volatility in both the equity markets and interest rates due to the government shutdown and debt ceiling talks, the S&P 500 index increased 4.5 percent and yields on high-grade corporate bond rates (which are used to measure liabilities) fell after congress passed the bill to raise the debt ceiling.

The month ended with bond yields lower than the end of September, with the Mercer Yield Curve discount rate for mature pension plans falling from 4.58 percent to 4.45 percent, but still up 74 basis points year-to-date.

See also: S&P 1500 pension plans roaring back

Mercer estimates the aggregate funded status position of plans operated by S&P 1500 companies on a monthly basis. The estimated aggregate value of pension plan assets of the S&P 1500 companies was $1.59 trillion at the end of 2012, compared with estimated aggregate liabilities of $2.14 trillion. Allowing for changes in financial markets through Oct. 31, 2013, changes to the S&P 1500 constituents and newly released financial disclosures, at the end of October the estimated aggregate assets were $1.83 trillion, compared with the estimated aggregate liabilities of $2.01 trillion.

Mercer is a global consulting leader in talent, health, retirement and investments.

Originally published on