S&P 1500 Pension Funded Status Increased 1 Percent in April 

May 9, 2024

United States, New York

The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies increased by 1 percent in April 2024 to 108 percent as a result of an increase in discount rates partially offset by a decrease in equity markets. As of April 30, 2024, the estimated aggregate surplus of $117 billion USD increased by $3 billion USD as compared to a surplus of $114 billion USD measured at the end of March according to Mercer,¹ a global consulting leader and a business of Marsh McLennan (NYSE: MMC).

The S&P 500 index decreased 4.16 percent and the MSCI EAFE index decreased 2.93 percent in April. Typical discount rates for pension plans as measured by the Mercer Yield Curve increased from 5.23 percent to 5.67 percent.

“Pension funded status for the S&P 1500 rose one percent in April as interest rate increases more than offset losses on equities,” said Scott Jarboe, a Partner in Mercer’s Wealth Practice. “Equity markets fell in April as signs pointed to the Fed holding off on rate cuts. Despite the equity sell off, with inflation coming in higher than anticipated in April, discount rates also sharply rose, leading to a favorable month for pensions. If healthy pension status continues, plan sponsors have a great opportunity to react and transact on risk transfer strategies this year, in spite of volatile markets.” 

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 April 30, 2024, 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 March 31, 2024, was $1.76 trillion USD, compared with estimated aggregate liabilities of $1.65 trillion USD. Allowing for changes in financial markets through April 30, 2024, changes to the S&P 1500 constituents, and newly released financial disclosures, at the end of April the estimated aggregate assets were $1.67 trillion USD, compared with the estimated aggregate liabilities of $1.55 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

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

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_{¹ Figures provided by Mercer Investments LLC.}

_{² Source of financial statement data: Standard & Poor’s Capital IQ. Standard and Poor’s is a division of The McGraw-Hill Companies, Inc. This may contain information obtained from third parties, including ratings from credit ratings agencies such as Standard & Poor’s.  Reproduction and distribution of third party content in any form is prohibited except with the prior written permission of the related third party.  Third party content providers do not guarantee the accuracy, completeness, timeliness or availability of any information, including ratings, and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such content.  THIRD PARTY CONTENT PROVIDERS GIVE NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. THIRD PARTY CONTENT PROVIDERS shall not be liable for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including lost income or profits and opportunity costs) in connection with any use of THEIR CONTENT, INCLUDING ratings. Credit ratings are statements of opinions and are not statements of fact or recommendations to purchase, hold, or sell securities. They do not address the suitability of securities or the suitability of securities for investment purposes, and should not be relied on as investment advice.}