The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies dropped two percentage points to 81% at the end of August. Rising interest rates helped mitigate losses in equity markets.
Mercer says the estimated aggregate deficit of US$423 billion increased by US$44 billion as compared to the end of July.
Funded status is now up by US$81 billion from the $504 billion deficit measured at the end of 2014.
Read: Pension health improves
The S&P 500 index lost 6.3% and the MSCI EAFE index lost 7.6% in August.
While the decline for the month was only two percentage points, August was a very bumpy ride for plan sponsors, says Matt McDaniel, a partner in Mercer’s retirement business.
Turmoil in equity markets stemming from concerns in China led to a decrease in funded status of more than five percentage points through Aug. 24.
“Fortunately, a partial recovery, combined with a rise in discount rates late in the month, allowed pension plans to recover much of the loss,” he adds.
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