Mercer: S&P 1500 Pensions 83% Funded in July

The estimated aggregate funding level of pensions sponsored by S&P 1500 companies saw a 1% increase in July to 83%, according to a report by Mercer.

Gains in equity markets were offset by a decrease in discount rates, the report said. The estimated aggregate deficit stood at $404 billion—a $12 billion decrease compared to the previous month. It’s also down $4 billion from the end of 2016.

The S&P 500 and MSCI EAFE indices saw respective gains of 1.9% and 2.9%. Typical discount rates for pension plans measured by the Mercer Yield Curve slid two basis points to 3.76%.

“Interest rates finally stopped their fall, allowing equity gains to drive a modest improvement in funded status,” Matt McDaniel, a partner in Mercer’s wealth business, said in a statement. “But rates remain depressed, and are still only 40 basis points above their 2016 lows. Rising rates would help funded status, plan sponsors will need a plan to capture these gains, or else they will continue to face significant risk.”

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At the end of July, estimated aggregate assets were $1.91 trillion, compared with the estimated aggregate liabilities of $2.32 trillion.

Estimates are based on each company’s latest available year-end statement as well as projections to July 31, 2017, in line with financial indices. Estimates include both qualified and non-qualified US domestic plans, as well as all non-domestic plans.

The figures for estimated aggregate surplus/(deficit) position and the funded status of all S&P 1500-sponsored company plans as well as high-quality corporate bond yield and S&P 500 data points can be viewed below.

Tags: Mercer, Pension, S&P 1500

Northstar Aerospace workers have occupied their plant in Milton, Ontario, Canada, demanding that the company fulfill its pension obligations, after it announced the facility would be shuttered due to the loss of a major Boeing contract.

According to Unifor, the union representing the workers, current retirees, some of whom had worked for Northstar for more than 40 years, could face a 24% cut to their income because of Northstar’s “insufficient funding” of the company’s pension plan, said Unifor.

“This action sends a clear message to Northstar that the company cannot short-change workers and the pension of retirees that have made it profitable for so many years,” said Jerry Dias, president of Unifor National in a statement. “There is no financial reason for refusing to fund the plan. The only excuse is corporate greed.”

The occupation began at 4 am on Aug. 10, and the workers said they have stopped production at the facility until Northstar holds up its end of a commitment to fully fund their pensions. “After months the company has refused to discuss the matter,” said Scott McIlmoyle, president of Unifor Local 112. “Time is running out – Northstar needs to do the right thing.”

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Although Unifor acknowledged that the loss of the Boeing contract makes it difficult to avoid closure, the union said the company is still “very healthy and there is no financial excuse not to supplement the pension plan in order to protect future and current retirees.”

The union said that the closure was unexpected by the facility’s 200 employees because Northstar workers had been assured that the Milton operation was on solid footing .

“Our members helped build Northstar Aerospace into what it is today,” said Scott McIlmoyle, president of Unifor Local 112. “This is not right; the company has a moral obligation and the financial ability to make up the pension short fall. Northstar is a financially stable and profitable company.”

Last week, more than 40 workers and Unifor members from the Greater Toronto Area picketed outside the Northstar facility in Milton, Ontario to pass out leaflets and speak with employees and management arriving for the morning shift. Unifor National President and Local 112 member Jerry Dias addressed the crowd.

“We have blood and sweat in this place, and there is no way that they’re taking the machinery out of here and cutting our members’ pensions,” Dias told the crowd. “When we say my sisters and my brothers, we mean it and we will fight for you.”

Northstar first announced the Milton plant’s closure in January, which it blamed on the loss of its contract with Boeing for gears.

“This facility closure is the result of market factors, not the facility’s performance,” said Thomas Smith, Northstar’s vice president and general manager, in a bulletin to the workers. “The closing of the Milton facility is the result of the loss of content on the Boeing AH-64E Apache program. There is not sufficient additional new work to make up for the drastic loss of content on the Apache program for the operation to remain open.”

Tags: Northstar Aerospace, Pension, strikes