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Funding of large companies' pension plans remained stable in July: Mercer


The average funded level of pension plans sponsored by large companies remained steady in July as rising interest rates, which reduced the value of plan liabilities, offset a drop in the equity markets, according to a Mercer L.L.C. survey released Tuesday.

On average, pension plans sponsored by companies in the S&P 1500 were 85% funded as of July 31, unchanged from June and up from 84% at the end of both May and April.

“The funded status of pension plans sponsored by S&P 1500 companies has remained relatively stable over the last five months,” Jim Ritchie, a principal in Mercer's retirement practice in Baltimore, said in a statement. “Modest gains in the equity markets have been offset by a gradual decrease in discount rates.”

Still, Mr. Ritchie notes two recent developments — the passage of federal legislation that will lower minimum funding requirements and the increase in employers offering former employees the opportunity to convert their future annuity benefit to a cash lump sum — could impact pension funding levels in the future.

“It will be interesting to see the extent to which these two developments impact funding levels over the remainder of 2014 and into next year,” Mr. Ritchie said.