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Hurt by falling interest rates, which inflated the value of plan liabilities, the funded status of pension plans sponsored by S&P 500 companies slipped to 82% as of March 31, down from 83.2% at the end of last year, according to an Aon Hewitt report released Thursday.
“Falling interest rates continue to drive liabilities higher, outpacing pension asset growth,” Ari Jacobs, global retirement solutions leader in Aon Hewitt’s Norwalk, Connecticut, office said in a statement.
Pension plan liabilities increased by 2.1%, or $44 billion, during the first quarter of 2015, overshadowing asset growth of 2.27%, or $12 billion, during the same period.
Analysts said that low insurance rates are likely to erode insurers' financial strength and earnings power for years to come, reports Reuters.