LINCOLNSHIRE, Ill.,
April 9, 2015 /PRNewswire/ -- The
funded status of U.S. pension plans dropped in the first quarter of
2015 as liabilities outpaced asset growth, according to a new
analysis by Aon Hewitt, the global talent, retirement and health
solutions business of Aon plc (NYSE: AON).
According to Aon Hewitt's Pension Risk Tracker[1], the funded
deficit for U.S. pensions increased by $32
billion in the first quarter of 2015 and the aggregate
funded ratio dropped to 82.0 percent in the first quarter of 2015,
from 83.2 percent in the previous quarter.
"The first quarter saw variability in funded status from month
to month, with February's improved funded status ultimately being
offset by decreases in both January and March," explained
Ari Jacobs, Global Retirement
Solutions leader at Aon Hewitt. "Falling interest rates continue to
drive liabilities higher, outpacing pension asset growth. As a
result, we anticipate continued settlement activity throughout
2015. Additionally, in-year declines in interest rates may
contribute to the attractiveness of lump sum programs, which often
base lump sum rates on interest rate levels from the end of the
previous year, resulting in potential accounting gains for plan
sponsors."
Pension liabilities increased by 2.1 percent, or $44 billion in the first quarter, as interest
rates fell. The drop in ten-year Treasury rates (-0.23 percent) and
widening credit spreads (0.05 percent), resulted in a 0.18 percent
drop in the discount rate over the quarter for the typical pension
plan.
This rise in pension liabilities overshadowed the 2.27 percent
returns, or $12 billion of asset
growth for the same period. Return-seeking assets in the Russell
3000 Index returned 1.80 percent, while bonds outperformed equities
during the first quarter.
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[1] Aon Hewitt tracks the daily funded status of 361 S&P 500
companies with defined benefit pension plans. The above analysis
reflects the roll-forward of the total defined benefit pension plan
information from the FYE 2013 10-K disclosures.
Media Contact:
MacKenzie
Lucas, 847-442-2995, mackenzie.lucas@aonhewitt.com
Maurissa Kanter, 847-442-0952,
maurissa.kanter@aonhewitt.com
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SOURCE Aon plc