Slide in large pension plan funding continues in February: Mercer
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The funded status of pension plans sponsored by large companies continued to fall in February, according to a Mercer L.L.C. survey released Tuesday.
On average, pension plans sponsored by companies in the S&P 1500 were 87% funded as of Feb. 28, down from 89% at the end of January and from 95% at year-end 2013.
While equity market investments in February were positive, those gains, were offset by other factors, Mercer noted.
For example, information disclosed in year-end financial statements showed that “asset values were slightly lower than previous estimates as a result of a broad market trend toward higher fixed income allocations that occurred throughout 2013 as many plan sponsors locked in gains from their equity returns,” Mercer said in its analysis.
In addition, many plan sponsors adopted more conservative assumptions about participant longevity, boosting liabilities.
In all, the plans had an aggregate funding deficit of $276 billion at the end of February, up from $232 billion as of Jan. 31, according to Mercer.
Even with the back-to-back monthly increases so far year in plan underfunding, the plans' status still are sharply higher compared with early 2013. At the end of January 2013, pension plans included in the Mercer analysis were on average 77% funded.
