The aggregate funded ratio for US corporate pension plans increased by 0.7 percentage points to December at 81.5 per cent, eliminating its year-to-date decline and eking out a 0.1 percentage points gain for the year, according to Wilshire Consulting.
The monthly change in funding resulted from a 1.3 per cent increase in asset values, which more than offset the 0.5 per cent rise in liability values. December’s improvement eliminated the year-to-date decline in funding ratios.
Asset values increased due to positive returns for most asset classes during the month. The increase in asset values was partially offset by the increase in liability values resulting from a slight decline in corporate bond yields during the month.
“December marked the sixth consecutive month of either flat or rising funded ratios, which has contributed to 2016 year-end funded ratios recovering to be slightly above 2015 levels,” says Ned McGuire (pictured), vice president and a member of the pension risk solutions group of Wilshire Consulting.
“This month’s increase was primarily driven by the continued post-election bounce in equity markets increasing the Wilshire 5000 Total Market Index by more than 2 per cent during December.”
