The funded status of the typical U.S. corporate defined benefit pension plan remained flat during the fourth quarter, driven by slight market gains and the tightening of credit spreads, according to a quarterly report from UBS Global Asset Management.
According to the UBS Pension Fund Fitness Tracker, utilizing data from 500 U.S. corporations' defined benefit plans, the typical funding ratio remained flat at 77%, increasing by less than one percentage point, despite what the firm states was tremendous volatility in assets and liabilities.
The typical plan returned 0.7% on all investments in the fourth quarter. Despite healthy equity markets, uncertainty because of the then-pending fiscal cliff created uncertainty, while fixed-income assets had mixed results, with corporate bonds with higher returns than both U.S. and international government bonds.
Liabilities were also higher in the fourth quarter as tightening credit spreads offset increases in yields.
Megan Stinson, spokeswoman at UBS Global Asset Management, did not return a phone call seeking further information.