The aggregate deficit in pension plans sponsored by S&P 1500 companies decreased by $12 billion to $607 billion in November, according to Mercer. The funded ratio of these plans was 72 percent as of Nov. 30, 2012. The previous high for the year-end aggregate deficit was $484 billion on Dec. 31, 2011.
Equity markets gained about 0.6 percent in November and discount rates remained relatively flat. The net effect was a reduction in the funding deficit.
"We don't have any expectations of significant changes in interest rates over the next 30 days, and equity markets could be volatile due to uncertainty around the fiscal cliff." said Jonathan Barry, a partner in Mercer's Retirement Risk and Finance Group. "It is very likely that we will see these plans at the highest aggregate deficit since we have tracked this data. This will mean higher year-end balance sheet deficits and P&L expense for 2013."
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Mercer estimates the aggregate combined funded status position of plans operated by S&P 1500 companies on a monthly basis. This includes US domestic qualified and non-qualified plans and all non-domestic plans. The estimated aggregate value of pension plan assets of the S&P 1500 companies on Dec. 31, 2011, was $1.45 trillion, compared with estimated aggregate liabilities of $1.93 trillion. Allowing for changes in financial markets through the end of November 2012, changes to the S&P 1500 constituents and newly released financial disclosures, the estimated aggregate assets were $1.59 trillion, compared with the estimated aggregate liabilities of $2.19 trillion as of Nov. 30, 2012.
Mercer is a global leader in human resource consulting and related services.
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