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

March 8, 2024 

United States, New York

The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies increased by 1 percent in February 2024 to 109 percent as a result of an increase in discount rates and equity markets. As of February 29, 2024, the estimated aggregate surplus of $137 billion USD increased by $12 billion USD as compared to a surplus of $125 billion USD measured at the end of January according to Mercer,¹ a global consulting leader and a business of Marsh McLennan (NYSE: MMC).

The S&P 500 index increased 5.17 percent and the MSCI EAFE index increased 1.68 percent in February. Typical discount rates for pension plans as measured by the Mercer Yield Curve increased from 5.11 percent to 5.33 percent.

“Pension funded status for the S&P 1500 rose one percent in February after another strong month for US equities and modest interest rate increases.  In addition to the current interest rate environment, equity markets also contributed to improved funded status as they continued their bull run, posting a gain for the fourth consecutive month dating back to the end of 2023,” said Scott Jarboe, a Partner in Mercer’s Wealth Business. “For pension plan sponsors, the market continues to remain in a great place to pursue de-risking. Plan sponsors will be paying close attention to the looming Fed decisions coming later this year, but hesitation on de-risking could result in missing the window of opportunity,” he added.

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 February 29, 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 January 31, 2024, was $1.79 trillion USD, compared with estimated aggregate liabilities of $1.66 trillion USD. Allowing for changes in financial markets through February 29, 2024, changes to the S&P 1500 constituents, and newly released financial disclosures, at the end of January the estimated aggregate assets were $1.75 trillion USD, compared with the estimated aggregate liabilities of $1.61 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

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 over 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 more than 85,000 colleagues and annual revenue of $23 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 X.

_{¹ Figures provided by Mercer Investments LLC.}

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