The aggregate funding ratio for U.S. corporate defined benefit plans improved in March on the back of rising equity markets, said reports from Mercer and Wilshire Consulting.
The estimated aggregate funding ratio of pension plans sponsored by S&P 1500 companies rose 1 percentage point to 79% in March, as equity market gains offset falling discount rates, according to Mercer. The S&P 500 index and MSCI EAFE index returned 6.6% and 6%, respectively, in March. The typical discount rate measured by the Mercer yield curve fell 23 basis points to 3.8%.
Mercer's estimated aggregate plan assets totaled $1.82 trillion as of March 31, up 4.6% from the end of February. Liabilities totaled $2.31 trillion, a 4.05% increase.
Separately, Wilshire Consulting reported the aggregate funding ratio for U.S. corporate pension plans rose 2.1 percentage points over the month to 80% as a 4.8% increase in asset values offset a 2.1% increase in liabilities.
The asset increase was driven by strong global equity returns while the liability increase was driven by falling corporate bond yields.
Despite a positive March, the aggregate funded status is still down 2.6 percentage points from 82.6% at the end of 2015, according to Wilshire Consulting, the institutional investment consulting and outsourced CIO unit of Wilshire Associates.
Wilshire's figures are the result of estimates of combined assets and liabilities of companies in the S&P 500 index that have defined benefit plans.
The estimated asset allocation was 32% domestic equity, 27% long-duration fixed income, 21% international equity, 18% core fixed income and 2% real estate.