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Pension Funds

Corporate pension funding falls in June

The funded status of the largest U.S. corporate pension plans declined in June, said reports from Wilshire Consulting and Legal & General Investment Management America.

According to Wilshire Consulting, the aggregate funded status for S&P 500 companies with corporate pension plans declined by 40 basis points over the month to 83.1% as of June 30.

Liability values rose 0.7% in June, outpacing a 0.2% increase in asset values, Wilshire said.

For the quarter ended June 30, the funded status is down 1 percentage point. Year-to-date through June 30, the funded status is up 1.2 percentage points, Wilshire said.

"June marked the third consecutive month of small declines in funded ratios after seven consecutive months of rising or flat funded ratios," stated Ned McGuire, vice president and a member of the pension risk solutions group of Wilshire Consulting, in a news release. "June's decrease was driven by the increase in liability values resulting from a 5-basis-point fall in the corporate bond yields used to value pension liabilities. Slight positive returns for most asset classes helped to partially offset the rise in liability values."

According to LGIMA, the funded status of a typical U.S. corporate pension plan with a 60% allocation to global equity and 40% to core fixed income fell 60 basis points over the month to 82.8% as of June 30.

LGIMA also found that the aggregate funded status declined 1.1 percentage points over the quarter, driven by a 4.55% increase in liabilities, which outpaced a 3.24% increase in assets. The quarterly liability increase was driven by a 23-basis-point decline in the discount rate to 3.84%. Global equity and domestic equity markets, meanwhile, returned 4.45% and 3.09% over the quarter.