S&P 1500 pension plans hit funding highs

The aggregate pension plan deficits of S&P 1500-sponsored employers dropped to $269 billion at the end of May 2013, according to research by Mercer.

The consultant’s monthly analysis of the Financial Accounting Standard (FAS) funding positions also revealed that the funded ratio (assets divided by liabilities) increased from 80% to 86% during May, to close out the month at the highest level since June 2011.

A continuing bull market in equities which saw another 2.3% growth during May improved asset levels, while a 46 bps rise in high quality corporate bond rates reduced the estimated liabilities by more than 7%.

Jonathan Barry (pictured), a partner in Mercer’s retirement business, said: “We have seen great leaps in funded status in the first half of 2013, and sponsors will certainly be hoping for more of the same over the coming months.

“This improvement dovetails nicely with feedback we are getting from clients who have implemented a glide path strategy: they are reaping the rewards of this rapid improvement and locking in the gains”