U.S. S&P 500 Pension Plans See $102 Billion Increase in Funded Deficit in the 3rd Quarter
Data from the Aon Hewitt Pension Risk Tracker, which evaluates daily funded status for S&P 500 companies with defined benefit pension plans, shows the aggregate funded ratio decreased from 83.5 percent to 78.7 percent. The change was largely driven by asset reductions of \\$79 billion along with liability increases of \\$23 billion year-to-date.
“Volatility in equity markets—particularly poor performance in August—drove the decline in funded status for the quarter,” said Ari Jacobs, Global Retirement Solutions leader at Aon Hewitt.
Third Quarter Findings:
- Return-seeking assets declined heavily. The Russell 3000 Index returned -7.2 percent.
- Bonds outperformed equities during the quarter, with the Barclay’s Long Gov/Credit Index returning 2.2 percent over this timeframe.
- Overall pension assets returned -3.5 percent over the quarter.
Among private-sector defined benefit plans with glide paths in place, approximately 5 percent executed a de-risking transaction in the third quarter and the average size of those transactions was a 2.6 percent shift from return-seeking assets to liability-hedging.