The aggregate funded status for pension plans sponsored by S&P 500 companies fell 720 basis points to 82.5% in 2014 as liability growth outpaced assets, said an annual report from Wilshire Consulting.
In 2014, liabilities increased 13.7% to $1.7 trillion, primarily the result of a 75-basis-point drop in the discount rate to 4.05% and strengthened mortality assumptions.
Of the 299 companies reviewed, the majority adjusted their mortality assumptions in some way, said Russell J. Walker, vice president, Wilshire Associates and co-author of the report, in a telephone interview.
Some plans strengthened their assumptions based on their own plan populations, while others more closely followed those published by the Society of Actuaries last year.
Assets, on the other hand, rose 4.6% to $1.4 trillion in 2014, boosted by positive investment returns.
The pension funds reviewed by Wilshire returned a median 9.2% in 2014, making it the sixth consecutive year of positive investment returns, although that number was down slightly from the median 11.1% achieved in 2013.
In 2014, global equity markets performed well on a local currency basis, Mr. Walker said.
Fixed-income returns were also strong “depending on where you were in the yield curve,” he added. Long Treasuries returned 25.1% in 2014, while high yield returned 2.5%.
Wilshire’s report also looked at companies’ pension contributions in calendar year 2014.
The companies reviewed by Wilshire contributed $36.6 billion total to their defined benefit plans in 2014, down slightly from $40 billion in 2013, which could suggest that some companies took advantage of the legislative funding relief passed last year, Mr. Walker said.
Wilshire collected data from 299 S&P 500 companies with defined benefit plans, the majority of which had Dec. 31 fiscal year-end dates.
Wilshire Consulting is the institutional investment consulting and outsourced CIO unit of Wilshire Associates.