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Pension Plan Assets Exceed Liabilities for First Time Since 2001

Results at the largest U.S. companies were aided by better-than-expected investment returns and a rise in interest rates.

June 12, 2008
Related Topics: Retirement/Pensions, Workforce Planning, Latest News
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Assets in pension plans sponsored by the largest U.S. companies last year exceeded plan liabilities for the first time since 2001, according to a consultancy’s analysis.

The results were aided by better-than-expected investment returns and a rise in interest rates, New York-based Mercer found.

For the 377 companies in the Standard & Poor’s 500 that offer defined-benefit plans, pension plan assets totaled $1.56 trillion at year-end 2007, compared with plan liabilities of $1.5 trillion, Mercer said.

Additionally, the median funded status of plans rose to 94 percent in 2007 from 89 percent in 2006.

The analysis, based on information reported in annual financial statements, also found that the median return on plan assets last year was 9.6 percent, nearly 1.5 points higher than the median expected rate of return.

Plan funding also benefited from a 30- to 50-basis-point rise in the discount rate used to value plan liabilities, Mercer said.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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