S&P 1500 Pension Funding Levels Improve

April 2, 2013 (PLANSPONSOR.com) - The aggregate deficit in pension plans sponsored by S&P 1500 companies improved significantly in the first quarter of 2013, according to Mercer.

The deficit decreased by $185 billion from the record year-end 2012 deficit to $372 billion as of the end of March 2013. The deficit improved by $107 billion in March alone. The funded ratio (assets divided by liabilities) improved to 82% at the end of March compared to 77% at the end of February and 74% at December 31, 2012.  

The significant improvement of the past month was driven by positive equity growth during the month, which gained 3.75%, Mercer said, driving the S&P to record highs by the end of March. The high quality corporate bond rates which affect the liabilities increased slightly.  

In addition to investment performance, assets have also grown due to contributions. During the fiscal year ending in 2012, S&P 1500 plan sponsors contributed more than $80 billion to their plans, which is $20 billion more than they had expected to at this time last year despite the enactment of MAP-21, which provided sponsors with the opportunity to lower contributions from prior requirements.