Having finished 2012 with their highest year-end pension deficits ever, S&P 1500 retirement plan sponsors are feeling greater financial pressure and will report decreased earnings in 2013, according to data published last week by Mercer Investment Consulting.
Falling interest rates were the cause of pension plans' losses despite overall annual asset growth of approximately 16% in the U.S. stock market. Discount rates fell by more than 80 basis points compared with year-end 2011, Mercer reported.
"Despite U.S. and non-U.S. equity indices outperforming expectations," said Jonathan Barry, a partner with Mercer's retirement consulting group, in a statement, "interest rates on high quality corporate bonds declined by more than 80 basis points in the calendar year, driving discount rates down and plan liabilities up significantly, with the overall result a significant decline in funded status for most plans."
Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.
Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
- Exclusive discounts on ALM and Treasury & Risk events.
- Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.
*May exclude premium content
Already have an account? Sign In
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
