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Member, Beacon International Group, Ltd.
Higher interest rates, which decreased the value of pension liabilities, led to a small improvement in plan funding levels in 2015, according to a Mercer L.L.C. survey released Tuesday.
On average, pension plans sponsored by companies in the S&P 1500 were 82% funded as of Dec. 31, 2015, up from 79% funded as of Dec. 31, 2014.
“Plan sponsors have been waiting years to see an increase in interest rates help improve their funded status. In 2015, we took a small step in that direction,” Matt McDaniel, a Mercer partner in Philadelphia said in a statement.
In all, the value of plan liabilities fell to $2.20 trillion at the end of 2015 compared with $2.39 trillion a year earlier, Mercer said. During the same one-year period, plan assets dipped to $1.80 trillion from $1.89 trillion. That resulted in an aggregate funding deficit of $404 billion, down sharply from just over $500 billion at the end of 2014.
Rising interest rates could give corporate pension funding levels a major boost in the next three years, according to a new report from Moody’s Investor Services Inc.