Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Corporate pension plan funded status flat for quarter, up in June: Reports

Reprints

The funded status of a typical U.S. corporate defined benefit pension plan remained relatively unchanged at slightly less than 90% in the second quarter, said Legal & General Investment Management America’s quarterly Pension Fiscal Fitness Monitor.

BNY Mellon Investment Management and Wilshire Consulting also both reported slight increases in the funded status of typical corporate DB plans in June.

Strong equity market returns offset falling interest rates, resulting in unchanged funded status levels, said Donald Andrews, head of LDI strategy at LGIMA, in a phone interview.

Global equity rose 5.2% in the second quarter, and discount rates fell 23 basis points, causing liabilities to increase by about 4%, Mr. Andrews said.

Mr. Andrews added that volatility remains low and plan executives continued to show interest in implementing option-based strategies.

LGIMA’s fitness monitor assumes an investment strategy of 60% global equity and 40% aggregate fixed income.

Separately, the typical corporate DB plan rose to 92% in June, up 1.4 percentage points from the previous month due to strong asset returns and falling liabilities, said the BNY Mellon Institutional Scorecard. Liabilities fell 0.2% in June, while assets returned 1.4%.

Meanwhile, the typical public DB plan returned 1.6% for a second consecutive month, exceeding its monthly return target of 0.6%.

The typical foundation and endowment returned 1.7%.

Despite the funding increase, the typical corporate DB plan is still down a total of 3.2 percentage points from a high of 95.2% at the end of December, BNY Mellon said.

Separately, the funded status for the typical U.S. corporate pension plan rose one percentage point in June to 87.1% due to strong equity returns, said a monthly report from Wilshire Consulting.

Since Jan. 1, the funding ratio has decreased 2.7 percentage points from 89.8%.

The typical pension fund, as studied by Wilshire, has an asset allocation of 33% domestic equity, 26% long-duration fixed income, 22% international equity, 17% core fixed income and 2% real estate. Wilshire uses data of S&P 500 company pension funds derived from corporate filings to create the model plan.

Meaghan Kilroy writes for Pensions & Investments, a sister publication of Business Insurance.