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Data & Research January 3, 2013
Record Year-End Pension Deficit for S&P 1500
S&P
1500 plan sponsors finished 2012 with the highest year-end pension deficit
ever.
Reported by Rebecca Moore
The aggregate deficit in pension plans sponsored by S&P 1500 companies increased by $73 billion to a record year-end high of $557 billion as of December 31, 2012, according to Mercer. This deficit compares to an aggregate pension deficit of $484 billion on December 31, 2011. While the December 31, 2012, funded ratio of 74% rebounded from a record low of 70% as of July 31, 2012, overall the ratio declined from the 75% funded ratio seen at December 31, 2011.
Despite overall positive annual asset growth of approximately 16% in the broad U.S. equity market, falling interest rates were once again the story for the funding status of pension plans as discount rates fell by more than 80 basis points as compared with year-end 2011.
For many companies, a larger pension deficit will drive higher profit and loss (P&L) expense, and decreased earnings in 2013.