Like temperatures as winter approaches, reduced hours of daylight and the time left in the year, pension funding fell in December, according to recent studies.
According to the Aon Pension Risk Tracker, during December the aggregate funded status of U.S. pension plans operated by the S&P 500 fell from 96% at the start of the month to 93.8% by its end. Fully Vested, which tracks a hypothetical plan, shows a similar decline in funded status for December, falling from 104.1% in November to 101.8% in December. Fully Vested attributed their results to poor equity returns in the last month of 2022.
Aon reports a similar trend for 2022 as a whole; their tracker shows that the aggregate funded ratio for S&P pension plans fell from 95.5% at the start of the year to 93.8% at the cusp of 2023. Fully Vested argues that 2022 highlights how volatile funded status can be, and that it can even vary highly from month to month.
Assets and Liabilities
Pension plan assets and liabilities fell in December, Aon says; they report that the funded status deficit of the S&P 500 plans increased by $9 billion. Pension asset returns showed a -1.9% return. Fully Vested also found that assets and liabilities fell in December.
But the fourth quarter of 2022 showed somewhat different results, according to Aon. They report that pension liabilities grew for the S&P 500, while overall pension assets improved and returned 4.7% over the quarter.
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