The funded status of S&P 1500 companies with defined benefit plans remained at 85% in July due to falling equity markets and slightly rising interest rates, said a monthly report from Mercer.
U.S. equity markets returned -1.5% in July, while the discount rate was up 3 basis points to 4.1% from 4.07% in June.
Estimated aggregate assets as of July 31 totaled $1.87 trillion, down from $1.88 trillion at the end of June and up from $1.8 trillion as of Dec. 31. Estimated projected benefit obligations remained at $2.21 trillion for the third consecutive month, up from $2.03 trillion at the end of December.
“The funded status of pension plans sponsored by S&P 1500 companies has remained relatively stable over the last five months. Modest gains in the equity markets have been offset by a gradual decrease in discount rates,” said Jim Ritchie, a principal in Mercer’s retirement practice, in a news release.
Separately, the funded status of the model pension plan as studied by Sibson Consulting and Segal Rogerscasey rose to 93%, up one percentage point from the second quarter, according to the firms’ quarterly report.
Assets returned 4%, while liabilities increased 3%.
The model pension fund studied by Sibson Consulting and Segal Rogerscasey has a passively managed asset allocation of 45% domestic equities, 40% global bonds and 15% international equities.