The aggregate funding ratio of pension plans globally was 80% in the third quarter, up one percentage point from three months earlier, according to Aon Hewitt.
Global pension assets increased 12% for the quarter ended Sept. 30, and liabilities increased 10%.
The funding ratio for U.S. plans increased two percentage points to 82%. Equity markets were up 5% to 10%, but investment gains were largely negated by plummeting corporate bond rates, which dropped to less than 5% in August — the lowest level in more than a decade — and increased in liabilities by 4% to 6%.
In the U.K., the aggregate funding ratio increased three percentage points for the quarter to 85%. Assets increased 10% and liabilities increased 7% for the quarter.
European pension plans remained flat at an aggregate 66%, while Canadian pension plans increased one percentage point to 88%.
“While the quarter closed with modest gains, market volatility continues to run at very high levels,” Ari Jacobs, Aon Hewitt’s North American retirement solutions leader, said in a news release. “Managing the risk remains the focus of pension plan sponsors as we head into year-end. Plan sponsors that have taken steps to systematically derisk their plans are benefiting from those decisions, while others continue to look for opportunities to gain control over their pension finances, including funding strategy, liability settlement and investment policy options.”
The study analyzed pension funding levels of corporate pension plans in the U.S., U.K., continental Europe and Canada in the S&P 500, FTSE 350, DJ EURO STOXX 50 and TSX.