U.S. corporate pension plans remained at or near 100% funded in April after slightly positive returns and slightly falling discount rates kept the numbers from moving too much, according to three new monthly reports.
Legal & General Investment Management America estimated the average funding ratio of the typical U.S. corporate pension plan was 100.5% as of April 30, up from 100.3% a month earlier.
In its latest monthly Pension Solutions Monitor, LGIMA said the estimated average funding ratio rose in April because the equity markets experienced slightly positive returns both in the U.S. and globally during the month, which offset declining discount rates that caused liabilities to rise. The monitor cited the MSCI AC World Total Gross index and S&P 500 index gaining 1.5% and 1.6%, respectively, during the period.
According to LGIMA, plan discount rates dropped an estimated 5 basis points during the month, with the Treasury component decreasing 3 basis points and the credit component tightening by 2 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 dropped to 101.7% in April, down from 102.3% a month earlier.
The manager cited its estimated drop in the discount rate of 7 basis points for the lower funding ratio to 4.89% as of April 30 from 4.82% as of March 31.
According to the estimate, assets grew by 0.2 percentage points because of positive returns, while liabilities increased by 0.8 percentage points.
In another monthly report, Aon said the aggregate funding ratio of S&P 500 companies that sponsor defined benefit plans dropped to 98.3% as of April 30 from 98.5% a month earlier.
Aon said pension assets returned 0.8% during April and the interest rates used to value pension liabilities fell to 4.85% from the previous rate of 4.89% estimated a month earlier.
According to Aon, falling discount rates led to pension liabilities rising and offsetting positive investment returns.