Planners concerned with the health of their clients’ pensions should take note that U.S. corporate pension plans managed a modest funding recovery in September, despite remaining in overall deficit status.

“While it is good to see some improvement over the past few months, the funded status of most U.S. pension plans has declined over the past year,” Jonathan Barry, a partner with the Retirement Risk and Finance business of Mercer, a global human resource consulting firm, said in a statement. Mercer has released new figures showing the slight improvement against a backdrop of ongoing deficit troubles.

“From last September 30, which is a fiscal year end date for some plan sponsors, to this September 30, the (nationwide pension) deficit has increased $81 billion from $512 billion to $593 billion underfunded,” Barry said, “despite significant contributions being made to these plans over the past 12 months. Since December 31, 2011, the deficit has increased by $109 billion.”

The aggregate deficit in pension plans sponsored by S&P 1500 companies decreased $38 billion during September, to $593 billion, according to new figures from Mercer. This deficit corresponds to an aggregate-funded ratio of 73% as of September 30, 2012, compared to a record low-funded ratio of 70% as of July 31, 2012, at which point the aggregate deficit was $689 billion.

The combination of U..S. and international equity markets rising approximately 3% during September and discount rates remaining relatively flat helped spur the rebound. Rates had been at a record low at the end of July.  But Mercer projects a significant increase in year-end balance sheet adjustments and P&L expense for many plans for 2013 and beyond.

“Plan sponsors need to brace themselves for the balance sheet and P&L implications of these funded status declines as they budget for fiscal 2013,” Barry said. “Time is running out for major positive market moves to significantly reduce pension deficits for this calendar year.”

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