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Pension Funds

Corporate pension funding falls for fourth time in past 5 months — reports

Businessman with his head bowed standing under falling graph with golden coins rolling down. Stock market selloff. Financial market. Economic crisis.

The aggregate funded status of the largest U.S. corporate pension plans fell in August, said reports from Wilshire Consulting and Legal & General Investment Management America.

According to Wilshire, the aggregate funding ratio for S&P 500 companies with corporate pension plans fell 90 basis points to 83.2% in August, the result of a 1.8% increase in liability values, which outpaced a 0.7% increase in asset values.

"August marks the fourth month of declines in funded ratios both year-to-date and in the past five months," said Ned McGuire, managing director and a member of the pension risk solutions group of Wilshire Consulting, in a news release. "August's funding decrease was driven by the increase in liability values resulting from a decline in corporate bond yields used to measure pension liabilities. The decrease in funding comes despite a 10th consecutive month of gains for the Wilshire 5000 Total Market index, its longest such streak in more than 20 years."

Year-to-date, the aggregate funded status is up 1.3 percentage points.

Separately, LGIMA found that the funded status of a typical U.S. corporate pension plan with a 60% allocation to global equity and 40% to core fixed income fell about 1 percentage point over the month to 82.9%.

The discount rate fell 11 basis points over the month, resulting in a 1.8% increase in liabilities, outpacing a 0.6% increase in assets, according to LGIMA.