The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies improved by 2% to 82% as of April 30th, 2015, due to a slight rise in equity markets and an increase in interest rates used to calculate corporate pension plan liabilities. The estimated aggregate deficit of $424 billion USD as of April 30th, 2015 improved by $56 billion USD from the end of March. Funded status is up by $80 billion USD from the $504 billion USD deficit measured at the end of 2014, according to Mercer, a global consulting leader in advancing health, wealth and careers, and a wholly-owned subsidiary of Marsh & McLennan Companies (NYSE: MMC).
The S&P 500 price index gained 0.9% in April while the MSCI EAFE index gained 3.7%. Typical discount rates for pension plans as measured by the Mercer Yield Curve increased by 18 basis points to 3.80%.
Mercer estimates the aggregate funded status position of plans sponsored by S&P 1500 companies on a monthly basis. Figure 1 shows the estimated aggregate surplus/(deficit) position and the funded status of all plans sponsored by companies in the S&P 1500. The estimates are based on each company’s year-end statement and by projections to April 30, 2015 in line with financial indices. The estimates include US domestic qualified and non-qualified plans and all non-domestic plans. The estimated aggregate value of pension plan assets of the S&P 1500 companies as of March 31, 2015, was $1.90 trillion USD, as compared with estimated aggregate liabilities of $2.38 trillion USD. Allowing for changes in financial markets through April 30, 2015, changes to the S&P 1500 constituents, and newly released financial disclosures, at the end of April the estimated aggregate assets were $1.90 trillion USD, compared with the estimated aggregate liabilities of $2.32 trillion USD. Figure 2 shows the interest rates used in Mercer’s pension funding calculation.
Mercer is a global consulting leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s more than 20,000 employees are based in 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 57,000 employees worldwide and annual revenue exceeding $13 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. For more information, visit www.mercer.com. Follow Mercer on Twitter @MercerInsights.