Funded ratio for US corporate pensions rises to 82.7 per cent in June as markets improve

The aggregate funded ratio for US corporate pension plans increased by 0.7 percentage points in June to end the month at 82.7 per cent, according to Wilshire Consulting, the institutional investment advisory and outsourced-CIO business unit of Wilshire Associates.

Wilshire Consulting assists in ensuring secure and safe retirements for millions of Americans, including those participating in some of the nation’s largest corporate and public retirement plans.

The monthly change in funding resulted from a 1.8 per cent increase in asset values partially offset by a 0.9 per cent increase in liability values. Despite a 1.7 percentage point increase during the second quarter, the aggregate funded ratio is estimated to have decreased by 5.9 percentage points year-to-date.  

“June’s increase in funded ratio was driven by a third consecutive monthly increase for most asset classes, especially US Equity,” states Ned McGuire, managing director and a member of the Investment Management and Research Group.  “The Wilshire 5000 Total Market IndexSM posted its best percentage quarterly gain of 21.94 per cent since the first quarter of 1975.”

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 FTSE Pension Liability Index – Intermediate. The funded ratio is based on the FTSE – Intermediate liability, with service cost, benefit payments and contributions in line with Wilshire’s 2019 corporate funding study. The most current month-end liability growth is estimated using the Barclays Long Aa+ US Corporate Index.