The funding ratio for the typical U.S. corporate pension plan rose 2.8 percentage points to 88.1% in March, according to an analysis by BNY Mellon Asset Management. That’s the highest funding ratio seen in BNY Mellon analysis since March 2008.
A strong March rally in U.S. and international stocks drove pension plan assets up 3.7%, outpacing a 0.5% gain in liabilities for the month. The small increase in liabilities was due to interest accrual. The Aa corporate discount rate remained unchanged at 5.96%.
“On the asset side, March was even better than February as pension plans benefited from a powerful performance from U.S. stocks, particularly small caps,” Peter Austin, executive director of BNY Mellon Pension Services, said in a news release. “While the interest rates affecting liabilities were unchanged in March, we did see a narrowing of spreads for the Aa corporate bonds as long U.S. Treasury yields increased to their highest level since October 2008.”