The funded status of a typical U.S. corporate defined benefit plan fell in the first quarter as liabilities grew faster than assets, said recent reports from Legal & General Investment Management America and UBS Asset Management.
According to LGIMA's quarterly Pension Fiscal Fitness Monitor, the funded status of a typical U.S. corporate pension plan fell 4.3 percentage points to 78.8% in the three months ended March 31.
Liabilities for the average plan rose 7.1% in the three months ended March 31, the result of a 42-basis-point drop in the discount rate to 3.94%.
Plans with a traditional 60% global equity and 40% aggregate fixed-income asset allocation saw their assets increase 1.6% during the period, the result of modest equity returns.
Global equities and the S&P 500 rose 0.4% and 1.3%, respectively, during the quarter.
Plans with liability benchmarking and/or completion management strategies fared better than the traditional 60/40 plan in the first quarter, with only a 60-basis-point-drop in funded status, said Don Andrews, head of solutions strategy at LGIMA, in a news release.
Separately, UBS found the funding ratio of a typical U.S. corporate DB plan declined approximately 6 percentage points to 81% in the first quarter as a 6.6% increase in liabilities outpaced investment returns of 1.5%.