U.S. corporate pension plans ended May with a drop in their aggregate funded status — a simple measure of their financial health.

The funded ratio for U.S. corporate pension plans decreased by 0.9 percentage points from April 30 to May 31, according to Wilshire’s May 2022 U.S. corporate pension plans funding report. Specifically, the aggregate funded ratio of the combined assets and liabilities of corporate pension plans sponsored by S&P 500 companies dropped from 98 percent at the end of April to 97.1 percent at the end of May.

Wilshire, a global financial services firm, attributed the month-over-month drop to two factors: an increase in liability values and a decrease in asset prices. From April to May, liability values increased 0.6 percent and asset values dropped 0.5 percent.

In the statement, Ned McGuire, managing director at Wilshire, said that liability values increased in response to a sudden decrease in yields “used to discount corporate defined benefit pension liability values,” he said.

As for the value of investments, McGuire attributed the decrease to a slew of macroeconomic factors, including rising inflation, the impact of the Federal Reserve increasing interest rates, and the war between Russia and Ukraine.

Meanwhile, despite the month-over-month decrease, the aggregate funded ratio of corporate pension plans increased by 0.9 percent — 2.6 percentage points — over the past year. Specifically, at the end of May 2021, the aggregate funded ratio was 94.5 percent. By the end of May 2022, that figure had reached 97.1 percent.

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