This represents a 1% drop in funding status from June’s aggregate figure (87% funded), Wilshire says. The setback was primarily the result of a decrease in asset values driven by negative equity returns.
“We estimate that overall, the asset value decreased by 1.1% primarily due to negative equity returns, while the liability value remained relatively unchanged over the period,” explains Jeff Leonard, managing director of Wilshire Associates.
Leonard notes that the year-to-date funded ratio for U.S. corporate pension plans has decreased by about 4%, from 89.8% to 86%. Considered another way, liability values have grown 9.3% during the preceding year, compared with a 4.6% increase in asset values, leading to the net drop in funded status.
Following equity market and interest rate trends, the aggregate funded status’ most recent peak came in November 2013, when the representative U.S. corporate pension plan was 92.6% funded.
Wilshire Consulting is the institutional investment advisory and outsourced-chief investment officer business unit of Wilshire Associates Incorporated. More information is available on Wilshire Consulting’s website.
— Matthew Miselis