U.S. corporate pension funding ratios moved slightly in February, according to reports by Legal & General Investment Management America and Northern Trust Asset Management.
LGIMA found that the pension funding ratio of a typical corporate pension plan increased modestly over February by 20 basis points to 88.8%, primarily driven by an increase in the discount rate to 4.12%, partially offset by negative equity returns.
As measured by Northern Trust, however, the average funding ratio for S&P 500 companies with corporate defined benefit plans dropped 60 basis points over the month to 85.7%.
LGIMA estimates that Treasury rates increased by 19 basis points, while credit spreads widened 6 basis points, resulting in the discount rate rising 25 basis points.
Liabilities for the typical plan were down 3.1%, while plan assets with a traditional 60% equity/40% bond asset allocation decreased by 2.9%, LGIMA said.
Global equity markets down more than 4% during the month drove the funding decrease in February and was partially offset by a 22-basis-point increase in the discount rate to 3.94%, Northern Trust said.