The aggregate funded status for defined benefit plans sponsored by S&P 500 companies fell 60 basis points to 81.4% in 2015, as declining asset values outpaced declining liabilities, said Wilshire Consulting’s annual corporate pension funding study.
Liabilities declined 4.2% to $1.61 trillion in 2015, due in part to 32-basis-point increase in the median discount rate to 4.37%. Liabilities were further reduced for some plans through lump-sum offers and buyouts.
However, those gains were offset by assets declining 5.3% to $1.31 trillion in 2015, driven by weak market performance.
The pension funds reviewed by Wilshire returned a median -1% in 2015. The last time the median return was negative was 2008, said Russell J. Walker, Wilshire vice president and co-author of the report, in a telephone interview.
Global market volatility, a rising U.S. dollar and slightly higher interest rates were some of the headwinds investors faced in 2015, Mr. Walker said.
Despite the drop in funded status, aggregate unfunded liabilities declined slightly to $299.7 billion at the end of 2015 vs. $302.8 billion at the start of the year.
Among the 281 companies reviewed, General Electric Co. posted the highest unfunded liability at $23 billion, representing 7.7% of the total 2015 shortfall and 18.4% of the industrial sector’s total shortfall.
Other companies that reported unfunded liabilities in excess of $10 billion in 2015 were Boeing Co. at $17.9 billion; AT&T Inc., $13.3 billion; Lockheed Martin Corp., $11.6 billion; Delta Air Lines Inc., $11.2 billion; and General Motors Co., $10.4 billion.
The report also found the companies contributed $29.9 billion total to their DB plans in 2015, just slightly above their $29.4 billion aggregate service cost and down $7.2 billion from 2014.
Wilshire collected data from 281 S&P 500 companies with DB 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.