The funded status of the typical U.S. corporate defined benefit pension plan increased 4.9 percentage points to 81.2% in January, the highest level since March 2012, according to a monthly report from BNY Mellon Asset Management.
Also released Tuesday, Mercer reported the funded status of DB plans of S&P 1500 companies increased three percentage points to an aggregate 77% as of Jan. 31.
Assets for the typical corporate plan increased 3% while liabilities decreased 3.2%, with discount rates rising 24 basis points to 4.13%, according to the BNY Mellon report.
Mercer reported the aggregate pension deficit declined to $482 billion from $557 billion in January, aided by equity markets gaining more than 5% and discount rates increasing 15 to 20 basis points.
“All the ingredients you need to see came together in January,” said Jeffrey Saef, managing director of BNY Mellon Asset Management, in a telephone interview. “It also happened maybe sooner than we thought it would.”
Mr. Saef said with more optimism on corporate earnings and U.S. growth, it translated into strong equity returns and rising interest rates. The Barclays Capital Aggregate bond index returned -0.7% for the month.
Estimated aggregate assets of the S&P 1500 plans were $1.62 trillion as of Jan. 31, up 1.9% from the end of 2012. Estimated aggregate liabilities were $2.11 trillion, down 1.4% from $2.14 trillion, according to Mercer.