U.S. Corporate Pension Plans Funding Status – February 2024

Wilshire estimates 3.4 percentage point increase in aggregate funded ratio for U.S. corporate pension plans in February.

Santa Monica, Calif., March 6, 2024 – The aggregate funded ratio for U.S. corporate pension plans increased by an estimated 3.4 percentage points in February, ending the month at 109.4%, according to Wilshire, a diversified global financial services firm. Wilshire assists in providing a suite of OCIO and advisory services to some of the nation’s largest retirement plans which help fund the retirement of millions of Americans.

This month’s change in funded ratio can mostly be attributed to a 2.8 percentage point decrease in liability value and a 0.2 percentage point increase in asset value. The aggregate funded ratio is estimated to have increased by 4.4 and 8.3 percentage points year to date and over the trailing twelve months, respectively.

“U.S. corporate pension plans have maintained their overfunded status for 14 consecutive months since early 2023. February's increase in funded status was attributed to a decline in liability values, driven by a nearly 30 basis point rise in corporate bond yields and an increase in asset values,” commented Ned McGuire, Managing Director at Wilshire. “The FT Wilshire 5000, along with other major equity indices, achieved all-time highs in February, countering negative bond returns caused by rising fixed income yields. The positive trend in asset and downward trend in liability values has the estimated funded ratio at its highest since Wilshire began tracking in late 2014,” added Mr. McGuire.

A 12-month review of thefunded ratio follows:

The aggregate figures represent an estimate of the combined assets and liabilities of corporate pension plans sponsored by S&P 500 companies with a duration in line with the FTSE Pension Liability Index – Short. The funded ratio is based on the FTSE – Short Liability, with service cost, benefit payments and contributions in line with Wilshire’s 2023 corporate funding study. The most current month-end liability growth is estimated using a FTSE Pension Liability Index – Short duration matched weighting of the Barclays Long and Intermediate Aa+ U.S. Corporate Indices.

The Data

Wilshire’s practice is to collect data on U.S. pensions from 10-K filings for companies in the S&P 500 Index at fiscal year-end (FYE). All data for fiscal year 2022 is based on the 253 S&P 500 Index constituents that maintain defined benefit pension plans as of year-end 2022.  The estimated monthly funded ratios are based on liabilities, service cost, benefit payments and contributions in line with Wilshire’s 2023 corporate funding study.

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