LINCOLNSHIRE, Ill. (October 11, 2016) – The funded status deficit for U.S. pension plans decreased by $10 billion during the third quarter of 2016 to $491.9 billion. According to Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), the change was driven by asset gains of $25 billion offset by a liability increase of $15 billion. Compared to the first two quarters of 2016, the third quarter is the only to show an improvement in funded status for the year.
Data from the Aon Hewitt Pension Risk Tracker, which evaluates daily funded status for S&P 500 companies with defined benefit pension plans, reveal the aggregate funded ratio increased from 76.8 percent to 77.4 percent in the third quarter.
“Between the elections, anticipated interest rate increases and continued debate around mortality tables, U.S. pension plan sponsors face a great deal of uncertainty in the fourth quarter and beyond,” said Ari Jacobs, Global Retirement Solutions leader at Aon Hewitt. “We expect more plan sponsors will initiate settlement strategies in the fourth quarter to benefit from accounting rules and as they continue to proactively manage risk in the ‘lower for longer’ interest rate environment.”
Third Quarter Findings:
In September, the S&P 500 aggregate pension funded status increased from 76.7 percent to 77.4 percent.
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