Administration December 2, 2014

Pensions’ Funded Ratio Unchanged in November

Wilshire reports that stability in aggregate pension funding during November was the result of comparable increases in asset and liability values.
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The aggregate funded ratio for U.S. corporate pension plans was unchanged at 84.8% for the month of November 2014, according to Wilshire Consulting.

“We estimate that overall, the asset and liability values increased by about the same percentage. The asset result is due to positive returns for most asset classes, while the liability value increased due to falling corporate bond yields,” states Jeff Leonard, managing director, Wilshire Associates, and head of the Actuarial Services Group of Wilshire Consulting.

“Year-to-date, the funded ratio for the sample plan has decreased by 5%, from 89.8% to 84.8%. This decrease was driven by the larger increase in liability value of 13% versus the 6.6% increase in asset value,” Leonard notes.

The aggregate figures represent an estimate of the combined assets and liabilities of corporate pension plans sponsored by S&P 500 companies with a duration in line with the Citi Group Pension Liability Index – Intermediate. The funded ratio is based on the CPLI – Intermediate liability, with service cost, benefit payments and contributions in line with Wilshire’s 2014 corporate funding study. The most current month end liability growth is estimated using the Barclays Long Aa+ U.S. Corporate Index.

The assumed asset allocation is 33% U.S. Equity, 22% non-U.S. Equity, 17% Core Fixed Income, 26% Long-Duration Fixed Income, and 2% Real Estate.

 

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