The funding ratio of the typical U.S. corporate defined benefit pension plan rose 1.9 percentage points in December to 76.3%, according to BNY Mellon Asset Management.
Assets for the typical plan increased 0.9% last month, primarily because of rising equity markets, while liabilities fell 1.7% as the corporate discount rate rose 13 basis points to 3.89%.
The funding ratio was up a percentage point from the end of 2011.
The new year brings uncertainty in the funded status of corporate DB plans despite a small improvement in overall funding ratio for the past year, according to Jeffrey Saef, managing director of BNY Mellon Asset Management.
“We bounced around, I want to say in the 160 to 180 (basis points) range but when I looked this morning we're definitely back to 'springtime (2012)' levels, closer to the 2% range than the 160 (bps) range. That's been pretty rapid. We haven't seen that in a long time,” Mr. Saef said in an interview.
As 2013 opens, he said much of the fate of funding levels depends on how “the market interprets the impact of the congressional decisions and Federal Reserve decisions. The wild card is when the Fed pulls back from the market in terms of the liquidity they've provided.”