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Discount rates outpace equity declines for corporate plans

Corporate pension plan discount rates jumped 41 basis points during the first quarter, driving the average plan funded status about 3 percentage points higher to 87.3%. The improvement in funded status wasn’t without its caveats though; global equity markets fell about 1% in the first quarter of 2018 (MSCI ACWI index), while the broad U.S. market fell about 1.09% (Russell 3000 index).

The quarterly increase was the first in plan funded status since the first quarter of 2017 when the ratio improved by 3 percentage points. That quarter built on the market’s euphoria following the U.S. general election, when the average funded status rose 4 percentage points.