Corporate Pension Fund Deficits at All-Time High

The latest research from Mercer Investment Consulting shows that the aggregate deficit in pension plans sponsored by the companies listed on the S&P 1500 stands at a record $689 billion at the end of July. That figure is up from $543 billion at the end of June, and represents an aggregate funded ratio of just 70%, down from 74% in June.

A Mercer analyst had this to say:

This record deficit proves that pension funded status volatility is showing no sign of abating, breaking the previous low of 71% at the end of September 2011. As we have turned past the halfway point for the year, sponsors really need to take a close look at how these deficits might impact their 2013 financials. Absent a significant rise in [discount] rates over the next five months, sponsors will be looking at higher year-end balance sheet deficits and P&L expense for 2013.

Mercer estimates the aggregate assets in domestic qualified and non-qualified plans and all non-domestic plans reached $1.57 trillion at the end of July, compared with estimated total liabilities of $2.26 trillion.

Paul Ausick