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Corporate pension funding improvement continues with increases in February — 2 reports

The funded status of the largest U.S. corporate pension plans increased in February as rising assets outpaced liabilities, said recent reports from Wilshire Consulting and Legal & General Investment Management America.

According to Wilshire, the aggregate funding ratio for S&P 500 companies with corporate pension plans increased 20 basis points in February to 83.4%, driven by a 1.9% increase in asset values, which offset a 1.6% increase in liabilities.

“February marked the sixth consecutive month of rising funded ratios, which has contributed to February month-end funded ratios being the highest since November 2015,” said Ned McGuire, vice president and a member of the pension risk solutions group at Wilshire Consulting, in a news release. “This month's increase was primarily driven by the continued postelection increase in equity markets lifting the Wilshire 5000 Total Market index 3.7% during February.”

Separately, LGIMA's report found that the funded status of a typical U.S. corporate pension plan with a 60% allocation to global equity and 40% to core fixed income rose 10 basis points over the month to an estimated 82.7%.

Assets for the typical plan were up 1.98%, driven by positive global equity market returns of 2.85%. Liabilities for the typical plan increased 1.86% over the month, driven by an estimated 11-basis-point drop in the discount rate.