The financial status of pension plans continued to deteriorate in the second quarter of 2012. Negative equity returns and a decrease in interest rates were the main reasons for the slide, according to Aon Hewitt. The median solvency funded ratio for a large sample of pension plans has decreased from 69 percent at the end of March 2012 to 66 percent at the end of June 2012.
Despite significant cash contributions to pension plans this year, the funding position of plans has still gone down from the beginning of the year.
About 97 percent of pension plans in this sample had a solvency deficiency. The solvency funded ratio measures the financial health of a defined benefit pension plan by comparing the amount of the assets to total pension liabilities in the event of a plan termination.
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