This decrease was driven by a larger increase in the aggregate liability value due to the decline in corporate bond yields versus the increase in the asset value.
“We estimate that overall, the asset value increased by 0.8% due to positive returns for most asset classes, while the liability value increased by 1.8% during the month,” says Jeff Leonard, head of the Actuarial Services Group of Wilshire Consulting, based in Santa Monica, California. “The effective yields used to discount pension liabilities decreased by over 10 basis points during the month.”
Leonard adds that year-to-date, the funded ratio for the sample plan used by Wilshire has decreased by 3.9% from 89.9% to 86%. This decrease was driven by the larger increase in liability value of 7.6% versus the 2.9% increase in asset value.
Wilshire Consulting is a subsidiary of Wilshire Associates, a global investment consulting and services firm.