S&P Aggregate Pension Funded Status Rose in November

Level rises to 85.8% for corporate plan funding, Aon says.

Thanks to a late-month push, the S&P aggregate pension funded status increased slightly in November, from 85.1% to 85.8%, according to a new report from Aon detailing the funding ratios from defined benefit plans originating from S&P 500 companies.

“Positive asset returns in November helped improve pension funded status getting us close to the levels we were at the beginning of the year – this has been the story all year long as strong asset performance across many asset classes has offset lower discount rates,” said Ari Jacobs, senior partner and global retirement solutions leader at Aon.

Things weren’t looking so bright in the early weeks of the month, but pension asset returns rebounded after being in negative territory, ending the month with a 1.2% return.

The amount fails to recoup some losses in the cumulative 2019 calculation. Aon measured $239 billion in liability increases in 2019 year-to-date, offset only partially by $200 billion in asset increases year-to-date , leaving pensions with a $39 billion deficit. The aggregate funded ratio for pension plans in the S&P 500 decreased overall from 86.0% to 85.8%.

Milliman recently reported similar gains for the 100 largest corporate plans, whose funding ratios increased to 86.8% from 86.1% in November. “Market performance in 2019 has been better than expected for corporate pensions, helping counteract the effect of the low discount rate environment on funding,” Zorast Wadia, lead author of the Milliman 100 PFI, said in a statement.

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The gap between expected or promised Lifetime Financial Security (LFS) benefits and what can likely be provided will hit nearly $16 trillion among 21 countries by 2050, according to a report from Group of Thirty, an international think tank of financiers and academics.

The funded level for state and local plans, namely the ratio of assets to liabilities, rose slightly in fiscal 2018, to 72.8% from 72.1% the year before, according to the Center for Retirement Research at Boston College.

Tags: Aon, Funding, Liabilities, Pension Plans, retirement systems, S&P

Home > News > Newsmakers > After Phase One Trade Pact, Talks Will Get Really Hard, Dimon Says

Newsmakers December 12, 2019

After Phase One Trade Pact, Talks Will Get Really Hard, Dimon Says

JPM chief is sanguine about an initial deal, but warns against more tariffs being imposed.

By Larry Light

Even if the Trump Administration strikes a phase one trade deal with China, future negotiations will be very difficult, says Jamie Dimon.

Although Dimon, head of JPMorgan Chase, indicated that he is optimistic about a phase one agreement to ease the US-China trade war, he suggested that “it will be very hard to have a real negotiated deal after that.”

The White House has said that such an initial pact is close, yet its contours remain murky. Beijing’s commerce ministry stated month that removing existing tariffs is a vital condition to any deal. From Washington’s perspective, a phase one pact would entail larger Chinese purchases of U.S. farm goods, as well better access to China’s financial services industry and promises to shield intellectual property.

The American demands may be harder to push through, Dimon said in remarks to reporters in Washington, where he was present for a meeting of the Business Roundtable, a trade group that he chairs. But he added that the Chinese regime seems to be opening its financial sector somewhat.

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Most immediately the top concern is whether President Donald Trump will go ahead and slap an extra $160 billion in tariffs on imported Chinese consumer items, such as smartphones and toys. This move is slated to happen on Sunday. Both Chinese and American officials have said it likely will be postponed, but Trump has not weighed in on what he will do.

If the new round of levies is put in place, Dimon said “it will be a negative in the marketplace and a small negative” for US and world economic growth. “There’s no question that the imposition of additional tariffs on December 15 will have a dampening effect on economic activity and a further dampening effect on CEO optimism.”

The bank chief said the largest risk going forward from a continuing trade war was its effect on American consumers, who thus far have been in a buoyant mood.