Funding ratios for corporate pension plans saw modest movement in April, according to reports from Wilshire Consulting, Mercer and Legal & General Investment Management America.
Wilshire's monthly report noted that the aggregate funding ratio for U.S. corporate plans increased by 2.2 percentage points as of April 30 to 83.2% from March 31. The monthly change in funding resulted from a 6.3% increase in asset values partially offset by a 3.6% increase in liability values.
"April's increase in funded ratio was primarily driven by the third best monthly return ever and the best monthly return since January 1975 for the Wilshire 5000," said Ned McGuire, managing director and a member of the investment management and research group of Wilshire Consulting, in a news release announcing the results. "April marks the first monthly increase in funded ratio since the beginning of the year."
Mercer said the estimated aggregate funding level of pension plans sponsored by S&P 1500 companies increased by 4 percentage points to 80% as of April 30 because of an increase in equity markets that offset a decrease in discount rates to 2.77% from 3.04%.
The estimated aggregate deficit of pension fund assets of S&P 1500 companies totaled $490 billion as of April 30, down $86 billion from the end of March.
"Despite a dip in discount rates, we saw funded status rise in April due to a nice rebound in the equity markets," said Matt McDaniel, a partner in Mercer's wealth business, in a separate news release. "Equity volatility, while still high, trended downward in April, but significant risk remains in equity markets.
Meanwhile, LGIMA found the funding ratio of a typical corporate pension plan dipped slightly by 0.1 percentage points to 73.4%, primarily driven by tightening credit spreads and lower treasury rates. LGIMA estimated U.S. Treasury rates fell by 7 basis points while credit spreads tightened by 39 basis points, resulting in the average discount rate decreasing by 46 basis points.
Liabilities for the typical plan increased 7.4%, while plan assets with a traditional 60% equity/40% bond asset allocation increased by roughly 7.2%, LGIMA said.
