Sobering News on Pension Funding Status of S&P 1500
Funding levels of pension plans sponsored by the S&P 1500 fell by 9 percentage points in 2014, from 88% to 79%. According to Mercer
, the plans’ collective deficits more than doubled last year, reaching $504 billion at year-end.
The plans had been doing well in 2014, Mercer said, having benefited from the 11.4% improvement in the S&P 500; however, typical discount rates for pension plans fell by 88 basis points and were at their lowest levels of the year by its end. In addition, improved longevity increased liability. As a result, by New Year’s Eve, the plans’ funding levels were roughly where they were are the end of 2012.
Mercer estimates that the aggregate value of S&P 1500 companies’ pension plans rose from $1.80 trillion at the end of 2013 to $1.89 trillion by the end of 2014. But their estimated collective liabilities also rose, from $2.03 trillion at the end of 2013 to $2.39 trillion by the end of last year.