Defined benefit pension assets for S&P 500 Index companies increased by $117.9 billion, from $982.3 billion to $1.1 trillion, while liabilities increased $108.3 billion, from $1.18 trillion to $1.29 trillion billion. As a result, the aggregate funding ratio for all plans combined increased from 82.9% to 85.1% and the -$202.3 billion funding shortfall at the beginning of the year shrank to a -$192.7 billion deficit.
Wilshire’s 2011 Report on Corporate Pension Funding Levels says 91% of corporate pension plans are under-funded, somewhat lower than the 93% reported for the previous year. The median (50th percentile) corporate funded ratio is 81.9%, which represents an improvement from 78.4% last year.
Pension fund performance in 2010 continued to recover from the significant losses of 2008, with the median investment plan returning an estimated 12% for fiscal 2010. This built on the 16.2% median plan return for 2009.
According to Wilshire Consulting, interest rates used to discount future benefits fell over 2010, contributing to the overall increase in pension liabilities for the year. The median discount rate fell from 6% to 5.5%, while total liabilities increased 9.1% for the year.
The combined pension expense for the S&P 500 Index companies in Wilshire’s study was $33.8 billion for 2010, up slightly from $30.6 billion a year ago. Regular annual pension expense accruals from employee service and interest expense on existing liabilities totaled $93.1 billion in 2010, 0.6% higher than the $92.5 billion a year ago.S&P 500 Index companies contributed $58.1 billion into their defined benefit plans in 2010, an increase from the $54.8 billion contributed in 2009.