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Member, Beacon International Group, Ltd.
Last month’s equity markets plunge and declining interest rates have eroded the funding levels of large corporate pension plans, according to a Mercer L.L.C. analysis.
The average funding level of pension plans sponsored by companies in the S&P 1500 fell to 79% as of Aug. 31, down from 83% at the end of July, Mercer said Tuesday.
That’s a drop of 9 percentage points from this year’s peak funded status set in April, when plans had an average funded ratio of 88%.
“August was a wild ride,” Jonathan Barry, a partner with Mercer’s retirement risk and finance group in Boston, said in statement. “We saw funded status plummet on Aug. 8 due to the sharp fall in equity markets and declining Treasury yields, and a lot of ups and downs over the subsequent weeks,” he added.
At the end of 2010, plans sponsored by S&P 1500 companies were an average of 81% funded, Mercer earlier reported.
The funding levels of pension plans sponsored by large publicly held U.S. employers dropped significantly in July, Milliman Inc. said in an analysis released Tuesday.