Aon has set out its “hopes and fears” for pensions in 2024. After a year in which UK pension schemes digested the events of 2022 and adjusted themselves to new circumstances, Matthew Arends, partner and head of UK retirement policy at Aon, looks at what the pension industry may have on its mind as it goes into 2024. “All those involved in running pension schemes may have mixed feelings as they face the New Year" There have been improvements in...
The aggregate funding position of FTSE 350 companies’ defined benefit (DB) has undergone a "complete reversal" over the past 18 months, Mercer's latest Pensions Risk Survey data has found. The tracker showed that the aggregate funding of FTSE 350 companies' DB schemes stood at £68bn at October 2023, recovering from roughly the same level of deficit (£69bn) at the end of Q1 2022. Mercer also suggested that changes in DB schemes’ funding position could be set to play a more positive role...
The median state pension plan funded status improved last year to 82.6% from 68.5%, according to data provided by Fitch Ratings. The rating agency's adjusted funded measure, which caps the assumed investment return at 6%, was 73.5% vs. 60.2% in 2021. States dropped their assumed rate of return in 2022, continuing a trend going back at least several years. Last year, the average fell to 6.88% compared with 7.6% in 2015. The number of states making at least 100% contributions compared...
When it comes to dealing with an overfunded frozen pension plan, International Business Machines is putting into action what some of its peers are thinking about. The company recently confirmed that it will cancel its defined contribution plan company match and replace it with a component within its IBM Personal Pension Plan, a defined benefit plan, on Jan. 1. The 401(k) match is 5% of an employee’s salary. The IBM 401(k) Plus Plan had $53.2 billion in assets as of Dec....
The overall estimated funding ratio of the 100 largest U.S. public pension plans declined for the third month in a row in October, once again due to negative market performance, according to the Milliman 100 Public Pension Funding index. The estimated ratio fell to 71.4% as of Oct. 31 from 73.2% a month earlier, driven by an estimated aggregate investment return of -1.9% during the period, with an estimated range of -2.8% to -1.1%. With the third straight month of negative...
The funding status of U.S. corporate pension plans increased in October, largely due to a reduction in liabilities stemming from an increase in discount rates, which were offset by negative investment returns. According to some trackers, pension funding status is at its highest point in decades. Funding Status Increases Fueled by High Interest Rates According to WTW’s pension finance tracker, U.S. corporate pension funding is at its highest level since mid-2001, with the funding ratio of WTW’s benchmark plan increasing 1.1...
The overall funding ratio at the 100 largest U.S. corporate pension plans edged up to 104.2% as of Oct. 31 – a new high for the year, according to the latest Milliman 100 Pension Funding Index released on Nov. 6. The funding ratio was 103.6% at the end of September. An investment return of -2.68% in October, the third consecutive month of losses, was offset by a significant increase in discount rates to 6.2% from 5.84%, which contributed to the gain. Assets...
U.S. state pension plans' aggregate funding ratios fell in the third quarter to the lowest level since the end of 2022, according to Wilshire Advisors estimates. For the quarter ended Sept. 30, the estimated ratio dropped by 3 percentage points from three months earlier to 75.2%, the result of an estimated 3% decrease in asset values exacerbated by an estimated 0.8% increase in liability values. It is the lowest estimated ratio since Dec. 31, when Wilshire estimated an aggregate funding ratio...
The aggregate funded ratio for U.S. state and local retirement systems is expected to improve to 78.8% in fiscal 2023 from 75.0% in fiscal 2022 when final numbers are released, according to Equable Institute’s mid-year update to its State of Pensions 2023 report, as unfunded liabilities are forecast to have declined an estimated $200 billion to $1.39 trillion over the year. The funding growth is a turnaround from the previous fiscal year, when the national average funded ratio for U.S. state and...
The average corporate pension funded status dipped to 104% in September from 104.4% the previous month, based on data tracked by NISA Investment Advisors for its Pension Surplus Risk index. In July, the funded status was 105.4%. NISA's PSRX, which measures the funded status volatility of U.S. corporate pension plans, rose to 6.9% in September. It was the third consecutive monthly increase. The PSRX measures a one standard deviation change in the funded status over a year. Hence, there is about...
