U.S. corporate pension plan funding ratios jumped further above 100% in June, driven by strong equity markets, according to three new reports.
Wilshire Advisors estimated the aggregate funding ratio of U.S. corporate plans vaulted 2.3 percentage points to 103.5% as of June 30.
The increase was driven primarily by increases in asset values, while liability values remained relatively unchanged.
"June's funded status saw the largest monthly increase since October 2022 due to asset value increases with the performance of the FT Wilshire 5000 in the first six months of this year, the strongest it has been since 2019, and the 11th strongest since the inception in 1974," said Ned McGuire, managing director at Wilshire, in a news release Thursday. "With June's month-end funded ratio estimate of 103.5%, U.S. corporate pension plans are fully funded in aggregate, and at its highest level since year-end 2007, which was estimated at 107.8%, before the great financial crisis."
Wilshire's assumed asset allocation is 31% long-duration fixed income, 28% core fixed income, 25% domestic equities, 14% international equities and 2% real estate.
Legal & General Investment Management America estimated the average funding ratio of the typical U.S. corporate pension plan also jumped to 103.5% as of June 30 from 100.7% a month earlier.
In its latest monthly Pension Solutions Monitor, LGIMA said the estimated average funding ratio rose due to an exceptionally strong equity market in June, both in the U.S. and globally. The monitor cited the S&P 500 index and MSCI AC World Total Gross index gaining 6.6% and 5.9%, respectively, during the period.
According to LGIMA, plan discount rates stayed flat during June, with the Treasury component increasing 8 basis points and the credit component tightening by 8 basis points.
The Pension Solutions Monitor assumes a typical liability profile using a duration of about 12 years and an asset allocation of 50% MSCI AC World Total Gross index and 50% Bloomberg U.S. Long Government/Credit index.
In a separate monthly report, Insight Investment said the funding ratio for U.S. corporate pension plans increased to 105% in June, up from 102.8% a month earlier.
The manager cited an estimated growth in assets of 1.9 percentage points and a fall in liabilities of 0.3 percentage points.
According to Insight's estimate, the discount rate increased very slightly to 5.09% as of June 30 from 5.08% as of May 31.
