Search
 

Pension underfunding is turning into a thing of the past

Pensions at the Standard &Poor's 500 pension plans took on a healthy glow in 2006 thanks to strong equity returns and lower bond yields. The ...

By Staff Writer | Updated on May 08, 2007

Pensions at the Standard &Poor’s 500 pension plans took on a healthy glow in 2006 thanks to strong equity returns and lower bond yields. The S&P 500 managed to slice nearly 75% of their underfunded status in the year just ended, closing out the year with $36.4 billion in underfunded liabilities vs. $140.4 billion at the end of 2005. The funding ratio status is expected to stand at 98% by yearend 2006, vs. the 90% funded status at the end of 2005, estimates Howard Silverblatt, senior index analyst at the Standard & Poor’s, thanks to the run-up in equities that began at the end of the fourth quarter and the mild up-tick in interest rates. The current run-up in funding, however, is still a long ways off from the heady days of 1999, when the funded status at S&P 500 pensions reached 128.2%. Still, the number of fully funded plans nearly doubled to 82 by yearend, from 47 in 2005. “Sometime this year, S&P 500 pensions will again be overfunded–on paper,” says Silverblatt, based on S&P’s current projections for the equities and interest rates. S&P is forecasting that the S&P 500 stock index will end 2007 at around 1510 and that interest rates will remain below 6%.

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.

Already have an account?

 

Recommended Stories

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2023 ALM Global, LLC. All Rights Reserved.