The funded status of a typical U.S. corporate pension plan rose in the second quarter of 2015 due to falling liabilities, said two new reports from Legal & General Investment Management America and UBS Global Asset Management.
According to LGIMA’s quarterly Pension Fiscal Fitness Monitor, the funding ratio of a typical U.S. corporate defined benefit plan rose 6 percentage points to 87.7% in the three months ended June 30. Liabilities fell 7.1% in the quarter, the result of a 60-basis-point increase in the discount rate to 4.4%. Assets also fell 0.4% as equity returns were relatively flat. Global equities returned just 0.5% in the quarter while the S&P 500 returned 0.28%.
The LGIMA Pension Fiscal Fitness Monitor assumes an investment strategy of 60% global equity and 40% aggregate fixed income.
Separately, UBS Global Asset Management found the funding ratio of a typical U.S. corporate DB plan rose about one percentage point to 87% in the second quarter with strengthened mortality assumptions factored in.
Without the mortality adjustments, the funding ratio would have been closer to 92% for the quarter, UBS said in a news release on the results.
Liabilities fell 7.3% in the second quarter, the result of a close to 60-basis-point increase in the discount rate, according to UBS.
Investment returns were slightly negative at -0.6%.