SANTA MONICA, Calif., April 8, 2013 (GLOBE NEWSWIRE) -- Despite the strong performance of U.S. equity markets in 2012, the number of U.S. corporate defined benefit pensions that were underfunded remained at 94 percent -- unchanged from 2011-- as market interest rates worked against the plans' funding ratios, according to the 2013 Wilshire Consulting Report on Corporate Pension Funding Levels . This is the thirteenth corporate funding report issued by Wilshire Consulting, the institutional investment advisory and outsourced-CIO business unit of Wilshire Associates Incorporated (Wilshire®), a diversified global financial services firm.
"As market-based discount rates moved lower, it increased these plans' accounting liabilities pushing the aggregate funding ratio, which we arrive at by dividing assets by liabilities, for all plans combined down from 79.7 percent to 78.1 percent and the -$282.3 billion funding shortfall at the beginning of the year expanded to a -$342.5 billion deficit," said Russ Walker, vice president, Wilshire Associates, and an author of the report. "Interest rates used to discount future benefits fell again during 2012, contributing to the overall increase in pension liabilities for the year. The median discount rate fell from 5.00 percent to 4.16 percent, while total liabilities increased 12.5 percent for the year, he added.
"Defined benefit pension assets for S&P 500 Index companies increased by $113 billion, from $1.11 trillion to $1.22 trillion, while liabilities increased $174 billion, from $1.39 trillion to $1.56 trillion. The median corporate funded ratio is 76.9 percent, which represents a modest decline from 77.7 percent last year," Walker noted.The defined benefit plans in Wilshire's study yielded a median 11.8 percent rate of return for 2012. This strong performance combines with the 3.6 percent median plan return for 2011, the 11.9 percent median plan return for 2010 and the 16.0 percent median plan return for 2009 to mark four consecutive years of gains for these plans after the global market dislocation events of 2007 and 2008.