Wilshire estimates nearly two percentage point increase in aggregate funded ratio for US corporate pension plans in December

The aggregate funded ratio for US corporate pension plans increased by 1.7 percentage points month-over-month in December to end the month at 86.8 per cent, a 0.3 percentage point decrease from December 2019, according to Wilshire Associates (Wilshire), a diversified global financial services firm. 

Through its suite of Outsourced Chief Investment Officer (OCIO) and advisory services, Wilshire 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.

December’s funded ratio resulted from a 1.5 percentage point increase in asset values and a 0.3 percentage point decrease in liability values. Despite a nearly 4 percentage point increase in funded ratio during the fourth quarter, the aggregate funded ratio is estimated to have decreased by 0.3 percentage points over calendar year 2020, primarily due to a 10 percentage point increase in liability mostly offset by a 9.5 percentage point increase in asset values.   
“December’s funded ratio increase was driven by positive monthly returns for most asset classes, including a record high close for the Wilshire 5000 Total Market IndexSM, due to optimism around a return to normalcy with the rollout of the Covid-19 vaccine,” says Ned McGuire, Managing Director, Wilshire Associates. “Over the calendar year, the funded ratio saw heightened volatility dropping more than seven percentage points during the first quarter with a near full recovery over the final three quarters.”