The aggregate funded status of S&P 1500 companies improved considerably in March as a result of strong equity markets, according to a study by Mercer.
The aggregate funding ratio rose to 82% at the end of March, up from 77% at the end of February, primarily because of the 3.75% increase in the markets. High-quality corporate bond rates that affect liabilities rose only slightly to 3.86% at the end of March from 3.82% at the end of February.
The aggregate pension deficit for the companies dropped $107 billion to $372 billion at the end of March.
The improvement was particularly strong when looking at the entire first quarter. At the end of 2012, the aggregate funding ratio of the S&P 1500 was 74%.
“Certainly the funded status improvement we saw in the first quarter is a great outcome for most plan sponsors” said Jonathan Barry, a partner in Mercer's retirement business, in a news release. “However, there is still some heavy lifting for plan sponsors to do to get to a fully funded position. Also, we saw a similar pattern in 2011 and 2012, where funded status improved significantly in the first quarter, only to see those gains reverse themselves as the year went on.”
The study also noted that S&P 1500 companies also contributed more than $80 billion to their plans, $20 billion more than had been expected at the beginning of the year.
