Bond yields aid pension plan funded status as equities falter

5 November 2009

US - According to Mercer’s analysis, the funded status of pension plans sponsored by S&P 1500 companies remained flat at 80 percent (deficit of $307 billion) in October. The 2008 year-end deficit was $409 billion, corresponding to a funded status of 75 percent.

Strong equity performance fails to improve funded status of pension plans

7 October 2009

US - According to Mercer’s analysis, the funded status of pension plans sponsored by S&P 1500 companies remained broadly unchanged during August, but was down from 82 percent to 81 percent over the third quarter and down from 84 percent since the end of March.

Pension plans flat in third quarter

5 October 2009

CANADA - Continued strength in portfolio returns helped buoy pension plans in the third quarter as the cost of purchasing annuities climbed. While government bond yields were stable over the quarter, the assumed credit premium over the yields decreased, sending solvency liabilities higher.

FTSE350 pension funding deficits increase despite equity market revival

2 October 2009

UK - FTSE 350 pension scheme funding deficits on a company accounting basis continue to increase despite the equity market revival, as credit spreads start to fall back from recent record highs.  The FTSE 350 aggregate pension scheme deficit at 30 September 2009 was estimated at £140 billion, corresponding to an overall funding level of 77 percent.

Funded status of pension plans fails to improve despite equity growth    

8 September 2009

US - Despite the continued recovery in equity markets, the funded status of pension plans sponsored by S&P 1500 companies did not improve during August, according to the latest estimates by Mercer. The declining yield on ”high quality” corporate bonds is causing an increase in the value of pension plan liabilities, which has offset the growth in equity values.

Improving credit markets deal a blow to pension plan sponsors 

8 July 2009

US - After several months of record high credit spreads, falling yields on corporate bonds and rising yields on Treasuries are having a negative impact on the funded status of pension plans, according to the latest estimates by Mercer.

Funded status for pension plans of largest US companies improves by $158 billion

9 April 2009

US - As equity markets rebounded in March and bond yields continued to increase, the funded status of pension plans of S&P 1500 companies improved by $158 billion, according to the latest estimates by Mercer. Based on these estimates, the aggregate deficit of pension plans sponsored by S&P 1500 companies was $215 billion at the end of March, down from $373 billion at the end of February and down from $409 billion at the end of December 2008. The aggregate funded status was 83 percent at the end of March, up from 74 percent at the end of February. The December 2008 year end funded status was 75 percent.

Rule Changes Save Pension Plans from Another Decline

3 April 2009

CANADA - The financial health of Canadian pension plans was unsteady in the first quarter, primarily due to continued volatility in stock markets. After all was said and done, the Mercer Pension Health Index* had increased to 62%, up 3% from the beginning of the year.

Canadian Pension Plans Pummelled in 2008

8 January 2009

CANADA - The financial health of Canadian pension plans plummeted in 2008, as stock markets and interest rates declined sharply. The Mercer Pension Health Index fell to 59%, down 23% from the beginning of the year.

S&P 1500 pension plans deficit hits record $280 billion
2 December 2008

US - Despite the stock market gains in the last few days of November, pension plans sponsored by the largest US companies suffered their second consecutive month of record losses, with their funded status falling by more than $130 billion in November. This adds to losses of $110 billion in October and $100 billion in the first three quarters of 2008, turning a surplus of $60 billion at the end of 2007 into a deficit of $280 billion at the end of November.

Pension scheme buy-out plans unaffected by financial crisis, say trustees and sponsors

14 November, 2008

UK - The current financial crisis appears not to have affected the plans of many pension schemes to undergo a buy-out according to responses from attendees at a recent Buy-outs and Risk Solutions event hosted by Mercer.  The responses provide substantial evidence that many trustee boards and sponsors have yet to build an effective and robust framework for considering how best to manage pensions-related risk exposures, despite the added pressure of the volatile financial climate.

Market volatility – Implications for trustees

16 October, 2008

The surpluses in pension schemes reported 12 months ago may have been wiped out by recent market turmoil but pension schemes should be able to continue paying their accrued benefits, according to Mercer. However, the company warned, this is dependent on the sponsoring employer remaining solvent. Where trustees have formed a favourable view of the employer’s covenant, Mercer believes they can afford to give higher consideration to the employer’s concerns about managing its risk exposures.

Pensions deficit survey – market volatility demands greater risk management

5 August 2008

• FTSE 350 deficit of £47 billion at 30 June 2008 compared with surplus of £14 billion in March

• FTSE 350 pension liabilities up to 25 percent of market capitalisation compared with 19 percent in March

• Estimated risk of default amongst 10 percent of most exposed FTSE100 companies has increased fourfold

Survey - Pension schemes risk further volatility

20 August 2007

Many schemes still face significant pension deficit volatility as a result of mis-matches between assets and liabilities, according to Mercer Human Resource Consulting. Although the de-risking of defined benefit pension schemes continues, Mercer’s FTSE 350 Pension Scheme Survey shows that for the most exposed 5% of the FTSE 350, the median impact of a 1-in-20 year adverse event (e.g. a major collapse in equity markets combined with low interest rates) could reduce their market cap by at least 12%.