DB Plans See a Bump in Funded Status in July

Mercer reports the funded status of S&P 1500 DB plans increased 1% in July, while Wilshire says the funded status for S&P 500 plans gained 0.8%.

Reports about defined benefit (DB) plans’ funded status suggest a slight bump in July.

The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies increased by one percentage point during July, reaching 77%, as positive equity markets more than offset a further decrease in discount rates, according to Mercer.

Mercer says the S&P 500 index gained 3.6% and the MSCI EAFE index gained 5.0% in July. Typical discount rates for pension plans as measured by the Mercer Yield Curve decreased by 12 basis points to a low of 3.35%.

The aggregate funded ratio for U.S. S&P 500 corporate pension plans increased by 0.8 percentage points to end the month of July at 76.3%, narrowing its year-to-date decline to 5.1 percentage points, according to Wilshire Consulting. The monthly change in funding resulted from a strong 2.9% rise in asset values that was partially offset by a 1.9% increase in liability values. The year-to-date decrease in funding is the result of a nearly 14% increase in liability values.

Mercer reports that as of July 31, the estimated aggregate deficit of $562 billion for S&P 1500 plans represents a decrease of $6 billion as compared to the end of June. However, this aggregate deficit remains down by $158 billion from the $404 billion deficit measured at the end of 2015.