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Aggregate funded ratio for US corporate pension plans down 4 per cent in February

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The aggregate funded ratio for US corporate pension plans decreased by 3.9 percentage points in February to end the month at 81.7 per cent, according to Wilshire Consulting, the institutional investment advisory and outsourced-CIO business unit of Wilshire Associates Incorporated (Wilshire). Wilshire Consulting assists in ensuring secure and safe retirements for millions of Americans, including those participating in some of the nation’s largest corporate and public retirement plans.

 
The monthly change in funding resulted from a 1.7 percent decrease in asset values and a 2.8 per cent increase in liability values. The aggregate funded ratio is estimated to have decreased by 6.9 and 8.8 percentage points year-to-date and over the trailing twelve months, respectively, and now stands at its lowest levels since December 2016. 
 
“February’s decrease in funded ratio was driven by a perfect storm of economic forces for corporate defined benefit pension plans: an increase in liability value and decrease in asset value. The liability value increase resulted from a nearly 40 basis point decrease in Treasury yields partially offset by a double-digit basis point increase in credit spreads for the second consecutive month. Return-seeking, or risk assets, declined significantly over the second half of the month,” says Ned McGuire, Managing Director and a member of the Investment Management & Research Group of Wilshire Consulting. “February marks the second consecutive monthly funded ratio decrease and the largest consecutive monthly decline in funding levels to begin a year since Wilshire began tracking in January 2013.”
 

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