The typical U.S. pension plan's funded status improved by 10.9 percentage points in 2006, according to Mellon Financial's Pension Liability index. The improvement was due largely to a rise in interest rates during the year, "reducing the value of liabilities for the typical plan. At the same time, rising equity markets contributed to higher assets at the typical U.S. pension plan," Peter Austin, executive director of Mellon Pension Services, said in a news release. For the year, Mellon found that assets at an average moderate-risk U.S. pension plan rose 12.1%, outpacing the 1.2% rise in liabilities. Over the last five years, Mellon reported that on average, pension plan assets rose an annualized 7.3%, roughly even with the average rise in liabilities of 7.1%.
In December, the typical plan's funded ratio improved by 3.5 percentage points, a result of higher discount rates, according to the release.