U.S. corporate pension plan funding ratios dipped slightly in August, but they still remain well above 100%, according to three new reports.
Legal & General Investment Management America estimated the average funding ratio of the typical U.S. corporate pension plan fell to 103.6% as of Aug. 31 from 104.9% a month earlier.
In its latest monthly Pension Solutions Monitor, LGIMA said the estimated average funding ratio rose despite liability values dropping, because both global and domestic equities suffered weak performance during August.
The monitor cited the MSCI ACWI Total Gross index and the S&P 500 index dropping 2.8% and 1.6%, respectively, during the period. Also, the monitor estimates plan discount rates increased 18 basis points during July, with the Treasury component increasing 19 basis points and the credit component tightening by 1 basis point.
The Pension Solutions Monitor assumes a typical liability profile using a duration of 12 years and an asset allocation of 50% MSCI ACWI and 50% Bloomberg U.S. Long Government/Credit index.
In another monthly report, Insight Investment said the funding ratio for U.S. corporate pension plans dipped to 106.5% as of Aug. 31 from 106.9% a month earlier. Insight's report also cited a week equity markets that dragged down asset values even as liabilities dropped during the same period.
According to Insight's estimate, the discount rate rose to 5.3% as of Aug. 31 from 5.15% as of July 31.
In another monthly report, Aon said the aggregate funding ratio of S&P 500 companies that sponsor defined benefit plans fell to 101.5% as of Aug. 31, down from 101.7% a month earlier.
Aon said pension assets returned -1.7% during August, and the interest rates used to value pension liabilities rose to 5.32% from the previous rate of 5.14% estimated a month earlier.