Corporate pension plans' funding ratios improved in June but were down overall for the second quarter, according to separate reports by Milliman and UBS.
Plans in Milliman's Pension Funding Index, which consists of the 100 largest U.S. corporate pension plans, experienced a combined $10 billion investment loss in June, but a $35 billion reduction in liabilities, resulting in a $25 billion improvement in funding. The plans' overall funding ratio rose to 87% from 85.5% a month earlier, and the total pension deficit was $186 billion, down from $211 billion, according to the report.
“Normally when assets decline, we're in for a fall in pension funded status, but not this month,” John Ehrhardt, Milliman principal, consulting actuary and co-author of the index, said in a news release.
Separately, the UBS Global Asset Management U.S. Pension Fund Fitness Tracker reports that the typical U.S. corporate plan's funding ratio declined two percentage points to 85% in the second quarter, confirmed UBS spokeswoman Emma Stradling.
The decline was a result of increased liability values, which resulted in a strong rally in U.S. Treasury yields, and mixed performance among asset classes, including slight increases in equities and larger increases in fixed-income assets.
“For many sponsors, Q2's adverse performance has erased more than half of Q1's funded status improvements,” Francois Pellerin, UBS' head of asset liability investment solutions, Americas, said in a release. “Although funded positions are still well ahead of where they were at this time last year, sponsors who have adopted a pension risk management framework have experienced higher funded status protection during Q2.”