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Alternative Market Briefing

Corporate pension funding ticks up in last year

Friday, July 12, 2019

Laxman Pai, Opalesque Asia:

The aggregate funding ratio for S&P 500 companies sponsoring defined benefit plans increased by 1.7 percentage points to 87.5% as of June 30, 2018, from 85.8% as of the end of fiscal year 2017.

According to Wilshire Associates' 2019 Corporate Pension Funding Report, aggregate assets decreased to $1.332 trillion as of June 30, 2018, down 6.5% from a year earlier. Contributions increased asset value by 4% for the fiscal year.

The aggregate pension deficit, represented by the difference between the market value of assets and liabilities, decreased by $46.6bn from a deficit of $236.5bn at the end of 2017 to a deficit of $189.9bn at the end of 2018.

Fifty-one of the 268 corporations, or 19.0%, have pension assets that equal or exceed liabilities as of fiscal year-end 2018 compared to 50 of the 267 corporations' DB plans, or 18.7%, at year-end 2017.

Note that at fiscal year-end 2007, five years into a recovery from the 2000-2002 bear market (and one year prior to the global recession of 2008 and early 2009), 42% of S&P 500 DB plans were at a fullyfunded or surplus status.

Wilshire estimates that aggregate assets decreased to $1,331.7bn as of fiscal year end 2018, a decrease of more than 6.5% from $1,424.8bn as of fiscal year end 2017. Negative aggregate returns on investment and benefits paid drove asset values lower for the year.

Over the past ten years, the total allocation to equity has declined by nearly fifteen per......................

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