July can be depended upon to bring some heat to the United States, and 2022 did not disappoint—and that included private-sector pension plans, according to recently released figures.
Funded Status
July brought good news according to October Three, which tracks two hypothetical pension plans—one traditionally invested, the other conservatively. The funded status of the traditionally invested plan, they report, improved by two percentage points and reached 104%, while that of the more conservatively invested plan improved by 1 percentage point to almost 100%.
Fully Vested concurs. Its model shows that funded status improved from 98.1% in June to 98.3% in July. They attributed this result to strong returns on equity and fixed income, which it said helped offset increasing liability.
Aon reported other results, however. Their pension tracker says that S&P 500 aggregate pension funded status fell slightly from 93.9% to 93.5% in July. It also reports that in July the aggregate funded ratio for U.S. pension plans in the S&P 500 fell very slightly by 0.2 percentage points from 95.5% to 93.5%.
Assets
Both October Three and Fully Vested note that improvements in the market. October Three said that “stocks enjoyed their best month of the year, led by U.S. markets,” and Fully Vested reported that there were strong returns on fixed income and equity, and that they helped offset increases in liability. Aon, however, found that assets dropped in July.
Liabilities
All three analyses reported that private-sector pension plan liabilities rose in July. However, both Aon and October Three also note that regardless of that, they have found that overall for 2022 so far liabilities have fallen from 2021 levels.
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