S&P 1500 Pension Funded Status Remained Level in August 

The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies remained level in August 2024 at 108 percent as a result of a decrease in discount rates offset by an increase in equity markets. As of August 31, 2024, the estimated aggregate surplus of $129 billion USD increased by $1 billion USD compared to a surplus of $128 billion USD measured at the end of July according to Mercer¹, a business of Marsh McLennan (NYSE: MMC).

The S&P 500 index increased 2.28% percent and the MSCI EAFE index increased 3.02% percent in August. Typical discount rates for pension plans as measured by the Mercer Yield Curve decreased from 5.25 percent to 5.10 percent.

“Pension funded status for the S&P 1500 in August remained level due to equity market gains and lower interest rates,” said Scott Jarboe, a Partner in Mercer’s Wealth Practice. “Signals from the Fed indicate that rate cuts are imminent, which may result in lower short-term interest rates. However, the ultimate impact on pension plan funded status remains unclear as long-term interest rates play a more significant role.”

“Plan sponsors should take a careful look at their plan’s interest rate risk, as plans with significant interest rate exposure may see decreases in funded status if long term rates decline,” Jarboe 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 August 31, 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 July 31, 2024, was $1.74 trillion USD, compared with estimated aggregate liabilities of $1.62 trillion USD. Allowing for changes in financial markets through August 31, 2024, changes to the S&P 1500 constituents, and newly released financial disclosures at the end of August, the estimated aggregate assets were $1.77 trillion USD, compared with the estimated aggregate liabilities of $1.64 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

_{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.}