September is a little bit of everything. It’s summer, it’s fall. Baseball season, football season. In like manner, the funding status of private-sector pension plans showed slight progress — or slight decline — this September, depending on the analysis. But the common theme is that there was relative stability.

This marks the second consecutive month in which the funding of private-sector pension plans had mixed results. They fared similarly in August, when a number of analyses diverged on whether private-sector pension plans lost ground or gained ground, but shared the assessment that any change they detected was slight. And those prolonged indeterminate results reflect a longer trend in which for months funding levels showed improvement, followed by a small decline in July.

Funding

Aon and Wilshire, both of which gather data about the defined benefit plans of companies in the S&P 500 Index, report slight improvement in plan funding in September.

And slight it was. Aon showed an improvement in plan funding of a mere 0.1 percentage point—from 100.7% to 100.8%. The increase Wilshire reports was three times as large. But don’t be too impressed—that means an improvement in funding status of 0.3 percentage points, from 101.3% to 101.6%.

October Three, however, holds a different view. The analytical firm, which tracks two hypothetical plans, showed that funded status slipped slightly in August. What they do share with Aon and Wilshire, however, is detecting only a slight change. The funding status of both the traditionally invested plan and conservatively invested plan they track each changed by a fraction of 1%.

Milliman joins them in reporting that the funding status of private-sector pension plans lost a little ground in September. Their pension funding index, in which they look at the 100 largest corporate DB plans, shows that the funded ratio of those plans stood at 102.4%, a drop of 0.2 percentage points from the 102.6% of August.

The key, for all four analysts, was how assets and liabilities fared in comparison to each other. October Three emphasized the increase in liabilities their plans registered. Aon and Wilshire found that assets increased a little more than liabilities; thus, the overall improvement they reported in funded status.

But “a little” is, of course, a relative term—Aon may report a slight increase in funded status, but that 0.1-percentage point growth translated to $48 billion more for those plans. Similarly, in dollars and cents the seemingly insignificant 0.2-percentage point drop in funded ratio Milliman reported spelled a loss of $4 billion. A caveat, however—despite the apparent severity of that figure, that represented a drop in their surplus of funds.

Assets

All four analysts are fairly consistent regarding how assets fared in September. All reported that during the last month, assets grew by 2% or close to it. October Three says that pension asset returns for both of the plans they track grew by around 2 percentage points; Aon, similarly, reported 2% growth. Wilshire and Milliman found an increase in asset value of nearly as much, 1.6% and 1.74%, respectively.

Wilshire Managing Director Ned McGuire in their monthly report said that “continued increases in asset values, with most asset classes posting positive returns during the month,” which exceeded increases in liabilities, were the reason they reported improvement in overall funded status.

Liabilities

Liabilities rose during August by the reckoning of all four analysts; lower interest rates were the most commonly cited reason. Wilshire reports that during September, liabilities grew by 1.4%. October Three and Milliman reported that liabilities grew a little more than did assets in September. October Three says that pension liabilities grew by 2%-3% while Milliman says that in the plans they track liabilities grew by $19 billion.

The Big Picture

As in August, the change in funded ratios may have been slight, but the analysts report that for 2024 as whole, the results are still strong overall.

Aon says that for the year so far, for the S&P 500 the aggregate funded ratio for U.S. defined benefit pension plans have grown by 3 percentage points from 97.8% to 100.8%. The assets of October Three’s conservatively invested plan grew by 6% for the year, and those of its traditionally invested plan grew by almost twice as much—11%. Wilshire reports that the funded ratio it measures has improved by 5.8% for 2024 so far.

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