US - The funded status of pension plans sponsored by the S&P1500 has plummeted to 81% in the last six months, analysis from Mercer has revealed.
The 3% fall came despite a strong performance in US equity markets, which have experienced 6 months of consecutive growth over the same period.
Mercer said declining yields on high quality corporate bonds had increased the value of pension plan liabilities, offsetting the growth in equity values.
Mercer financial strategy group member Adrian Hartshorn added: “With the strong recent positive equity returns, many would expect the financial position of pension plans to have improved…however, the 24% growth in pension plan asset values has been matched by a similar level of growth in liability values.”
The analysis also predicted pensions expenses will reach $41bn in 2010 if the funded status remains unchanged, representing a $14bn reduction on the 2009 figure - but still substantially larger than the $21.7bn reported in 2008.
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