The financial sector had an overall pension funded status of 95.2 percent, and other industries declined from there, but one particular industry had the lowest funded status. (Photo: Getty)
The funded status of corporate pension plans decreased slightly in the first quarter of 2018, according to investment management firm Barrow, Hanley, Mewhinney & Strauss.
In its latest corporate pension funded status report, the firm finds that average funded ratios fell slightly to 86.7 percent as of March 31, 2018, from 87.1 percent as of December 31, 2017.
Liabilities went down by 1.3 percent, but pension assets outpaced that fall, losing 1.8 percent in Q1. In addition, there was substantial variation by industry and sector, with the banking industry having the best funded status, at 102.3 percent, within the financial sector, which had an overall funded status of 95.2 percent.
Consumer staples had an overall funded status of 84.2 percent, while industrials overall came in at 83.4 percent. Within the industrial sector, however, airlines had the lowest average funded status at 70.1 percent.
The report adds that Barrow Hanley's estimate of the funded status of corporate pension plans sponsored by companies in the Russell 3000 was created using information disclosed in SEC Form 10-K and returns for asset class indices for each year end since 2005. As of March 31, 2018, the average funded status fell slightly, but stayed close to its previous recent high of 87.8 percent at year-end 2013.
Average asset allocations and their returns for Q1 were as follows: 43 percent in equities, divided between the Russell 3000 at 65 percent and the MSCI EAFE, at 35 percent, with a return of -1 percent; 38 percent in bonds, divided between Barclays Long Gov./Credit, at 75 percent and Barclays Aggregate, at 25 percent, with a return of -3.1 percent; 2 percent in real estate, in FTSE NAREIT Equity, with a return of -6.7 percent; 14 percent in alternatives, divided among HFRI Fund Weighted Composite, at 45 percent, S&P Listed Private Equity Index, at 35 percent and Dow Jones UBS Commodity Index, at 20 percent, with a return of -0.9 percent; and 3 percent in cash, with a return of 0.4 percent.
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