While corporate pension plans of S&P 500 Index companies remained underfunded at 85.1% in 2010, the funding shortfall dropped from $202.3 billion the previous year to $192.7 billion at the end of 2010, a newly released report finds.
The findings come from the 2011 Wilshire Report on Corporate Pension Funding Levels. Wilshire also found that 91% of corporate pension plans were underfunded in 2010, which is an improvement on the 93% that reported being underfunded in 2009. The median corporate funded ratio is 81.9%, an increase on the previous years 78.4%.
Pension performance for S&P 500 companies was also positive, although 2010s 12% was less than the 16.2% Wilshire says they reported the year prior. In 2008, the plans faced a devastating -27.4% median return. In years prior, the plans returned a median of 8.2% (2007) and 11.2% (2006).
Wilshire says the expected rate of return for pension assets has been coming down in recent years. The median expected return was 9.50% at the end of 2000 and has fallen to 8.00% at the end of 2010, the firm says in its report.
Greenwich Associates acknowledged in February that the wider community of US corporate pension funds returned a mean of as much as 16% last year, yet averaged -20% returns in 2009. Public pensions returned a slightly less 14%, Greenwich reported.
(CG)