The aggregate funded status of S&P 1500 companies' pension plans remained stable in August despite market volatility, according to Mercer's monthly funded status report.
The aggregate funding ratio of those companies remained unchanged from July at 89%. The stability in the funding ratio came from the continuing rise in discount rates. The high-quality corporate bond yield curve rose 17 basis points to 4.63% in August, to bring the total year-to-date rise to 92 basis points, according to the report.
The rising discount rate made up for equity markets dropping in August. The S&P 500, for example, fell 3.1%, while the MSCI EAFE index fell 1.6%.
“While there was no significant change in the funded ratio, there was a lot of volatility underpinning both the asset and liability numbers this month,” said Jonathan Barry, a partner in Mercer's retirement business, in a news release. “We saw a lot of uncertainty in the market around the Fed's bond buying program, coupled with concerns around global geopolitical events, resulting in equity markets performing quite poorly for the month.”
The estimated aggregate fair value of pension plan assets of S&P 500 companies as of Aug. 31 was $1.73 trillion, while estimate aggregate liabilities totaled $1.94 trillion.