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U.S. corporate pension funding little changed in May — 2 reports

The funded status of the largest U.S. corporate pension plans remained relatively level in May, said reports from Mercer and Wilshire Consulting.

The estimated aggregate funding ratio of defined benefit plans sponsored by S&P 1500 companies was 83% at the end of May, relatively unchanged from the end of April, as falling discount rates offset positive equity markets, according to Mercer.

The estimated aggregate value of pension fund assets of S&P 1500 companies totaled $1.9 trillion as of May 31, up 2.2% from April 30, while estimated aggregate liabilities totaled $2.29 trillion, up 1.8% from the end of April.

The S&P 500 index and MSCI EAFE index returned 1.2% and 3.1%, respectively, in May, while the typical discount rates fell 12 basis points to 3.82%.

According to Wilshire, the aggregate funding ratio for S&P 500 companies with corporate pension plans was 83.6% as of May 31, down 0.2 percentage points from April 30.

Liability values rose 1.7% in May, outpacing a 1.5% increase in asset values, Wilshire said.

“May marked the second consecutive month of small declines in funded ratio after seven consecutive months of rising or flat funded ratios,” said Ned McGuire, vice president and a member of the pension risk solutions group of Wilshire Consulting, in a news release. “This month's decrease was driven by the increase in liability values caused by the 11-basis-points fall in corporate bond yields used to value pension liabilities. Positive returns for most asset classes nearly offset this rise in liability values.”