This deficit corresponds to a funded status of 78%, compared to a funded status of 76% at the end of September and 84% on December 31, 2009.
According to a Mercer news release, equity gains continued in October generating returns of 4% for the month after returning 9% in September. The yields on long maturity AA bonds, which declined to historic lows as of the end of August, rose by approximately 17 basis points in October. Because pension plan liabilities are valued using similar AA bond yields, the result was generally higher discount rates and lower liabilities for most plans as of the end of October.
“While October showed some improvement in the aggregate funded status, there is still a long way to go before most plans will be considered adequately funded,” said Kevin Armant of Mercer’s Financial Strategy Group, in the news release.Mercer noted that as plan sponsors look toward year-end financial reporting, much uncertainty remains, including the potential impact of the Fed’s expected quantitative easing (QE2).