Pension plans' funded status drops in U.S., Canada, eurozone
By Rob Kozlowski | October 31, 2012 2:56 pm
The funded status of corporate defined benefit plans declined in the U.S., Canada and the eurozone in the first nine months of the year, but improved in the United Kingdom, according to a report from Mercer.
The typical funding ratio of U.S. defined benefit plans dropped to 73% from 75%, while Canadian plans dropped to 83% from 87%.
The greatest decline of eurozone countries was the Netherlands, where the typical funding ratio dropped to 80% from 96% because of drops in the discount rates used to measure liabilities. Mercer said in the report that the interest rate environment in the Netherlands is replicated in other eurozone economies.
The typical funding ratio in the U.K. improved to 92% from 89%.
U.S. multinationals might be affected on their 2013 earnings not only because of falling interest rates in the U.S., but overseas as well.
“There's a multitude of risks facing multinationals with only a single DB scheme, but this data shows the scale of the risks and problems facing companies with schemes in multiple geographies,” said Frank Oldham, senior partner and global head of the defined benefit risk group at Mercer, in a news release.
Typical funding ratios are estimated based on average ratios for companies listed in the S&P 1500 for the U.S., the FTSE 350 for the U.K., the S&P/TSX for Canada and the AEX/AMX for the Netherlands.
Spokesman Charles Salmans did not return a phone call by press time.