Wilshire Consulting: Corporate Pensions Drop Slightly in May, Maintain 6% YTD Increase

The global advisory company points to an increase in liability values to explain May’s -0.2% fall.

The aggregated funded ratio of US corporate pension plans dipped slightly in May, but overall have seen a year-to-date (YTD) increase of 6%, according to Wilshire Consulting. The global advisory firm estimated the reason for the 0.2% decrease in May (from 83.8 % to 83.6%) is due to the increase in liability values.

“May marked the second-consecutive month of small declines in funded ratio after seven consecutive months of rising or flat funded ratios,” said Ned McGuire, vice president and a member of the Pension Risk Solutions Group of Wilshire Consulting.  “This month’s decrease was driven by the increase in liability values caused by the 11 basis points fall in corporate bond yields used to value pension liabilities.  Positive returns for most asset classes nearly offset this rise in liability values.”

A 1.7% increase in liability values nearly offset by a 1.5% increase in asset values drove the change downward. The aggregate funded ratio is also down 0.5 percentage points (from 84.1% at the end of March), yet up 1.7 percentage points year-to-date.

April also saw a similar situation, as the funded ratio was down 0.3% for the month but managed to receive a 1.9% YTD increase, up 6.6% from the previous year. April only received a 1.3% increase in liability values and increased its asset values by just 1%. Since January, the funded ratio has been steadily increasing, with the exceptions of April and May. 

photo credit by dockie

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