Pensions See January Funding Status Drop

February 8, 2010 ( – Companies in the S&P 1500 suffered a slight drop in their pension plan funded status in January to 83% from 84% the month before, according to Mercer.

A Mercer news release said pension liabilities were largely unchanged over the month as investment grade corporate bond rates were relatively stable, with the drop in the equity markets producing the funded status decline.

The estimated aggregate value of pension plan assets of the S&P 1500 companies at December 31, 2009, was $1.25 trillion, compared with estimated aggregate liabilities of $1.50 trillion. Allowing for changes in financial markets in 2010 and changes to the S&P 1500 constituents, the estimated aggregate assets were $1.24 trillion in January, compared with the estimated value of the aggregate liabilities of $1.50 trillion.

“Although the accounting rules only require sponsors to book a snapshot measurement of their plans’ funded status at their fiscal year-end, many sponsors are monitoring the financial markets and the way that markets have affected the funded status of their pension plan much more frequently,” said Adrian Hartshorn, a partner in Mercer’s Financial Strategy Group, in the news release. “This allows them to avoid surprises as well as to implement dynamic asset allocation decisions to avoid or cushion the impact of market volatility,” which helps companies manage financial risk in their retirement programs. 

Mercer said the latest data is based on projections of companies’ reported financial statements adjusted from each company’s financial year-end to January 31 in line with financial indexes. This includes U.S. domestic qualified and non-qualified plans and all non-domestic plans.

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