S&P 1500 Pension Funded Status Decreased by 1 Percent in March 

April 7, 2023
United States, New York

The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies decreased by 1 percent in March 2023 to 102 percent as a result of a decrease in discount rates partially offset by an increase in equity markets. As of March 31, 2023, the estimated aggregate surplus of $28 billion USD decreased by $25 billion USD as compared to a surplus of $53 billion USD measured at the end of February according to Mercer,1 a global consulting leader and a business of Marsh McLennan (NYSE: MMC).

The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies decreased by 1 percent in March 2023 to 102 percent as a result of a decrease in discount rates partially offset by an increase in equity markets. As of March 31, 2023, the estimated aggregate surplus of $28 billion USD decreased by $25 billion USD as compared to a surplus of $53 billion USD measured at the end of February according to Mercer

“Pension funded status for the S&P 1500 decreased one percent in March as discount rates fell and more than offset the bounce back in equity markets,” said Scott Jarboe, a Partner in Mercer’s Wealth Business. “Inflation reports in March continued to show the trend of slowing inflation although at a pace that’s still above long-term expectations. The recent bank troubles have startled markets but at this point the key impact is that rates have decreased as many believe the Fed will end rate increases soon to try and avoid further bank troubles. This remains to be seen but as markets keep a close eye on the banking situation, rates and the Fed, plan sponsors should continue to evaluate their risk position. Doors to various risk transfer strategies could open and close fairly quickly if market volatility continues throughout this year.” 

Mercer estimates the aggregate funded status position of plans sponsored by S&P 1500 companies on a monthly basis. Figure 1 (below) shows the estimated aggregate surplus/(deficit) position and the funded status of all plans sponsored by companies in the S&P 1500. The estimates are based on each company’s latest available year-end statement2 and by projections to March 31, 2023 in line with financial indices. The estimates include U.S. domestic qualified and non-qualified plans, along with all non-domestic plans. The estimated aggregate value of pension plan assets of the S&P 1500 companies as of February 28, 2023 was $1.72 trillion USD, compared with estimated aggregate liabilities of $1.66 trillion USD. Allowing for changes in financial markets through March 31, 2023, changes to the S&P 1500 constituents, and newly released financial disclosures, at the end of March the estimated aggregate assets were $1.78 trillion USD, compared with the estimated aggregate liabilities of $1.75 trillion USD. Figure 2 shows the discount rates used in Mercer’s pension funding calculation.

 

Notes for editors

 

Information on the Mercer Yield Curve is available at http://www.mercer.com/pensiondiscount.

 

The Mercer US Pension Buyout Index may be accessed at http://www.mercer.us/our-thinking/mercer-us-pension-buyout-index.html.

 

Unless otherwise stated, the calculations are based on the Financial Accounting Standard (FAS) funding position and include analysis of the S&P 1500 companies.

 

Figure 1 : Estimated aggregate funded status of all plans sponsored by companies in the S&P 1500

Source: Mercer, March 2023

Figure 2: High Quality Corporate Bond Yield and S&P 500 data points

Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 85,000 colleagues and annual revenue of over $20 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit mercer.com. Follow Mercer on LinkedIn and Twitter.

_{¹ Figures provided by Mercer Investments LLC.}

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