U.S. corporate pension plan funding ratios remained relatively stable in July after months of poor investment returns had negatively affected the health of the plans, according to three new reports.
Legal & General Investment Management America in its report estimated the average funding ratio of the typical U.S. corporate pension plan rose to 95% as of July 31 from 94% a month earlier.
LGIMA in its latest Pension Solutions Monitor cited positive equity returns during the month, noting the S&P 500 returned 9.2% during the period. The returns helped offset a rise in liability values that resulted from a drop in discount rates during July.
The Pension Solutions Monitor assumes a typical liability profile using a duration of about 12 years and an asset allocation of 60% MSCI AC World Total Gross index and 40% Bloomberg U.S. Aggregate Bond index.
In another monthly report, Insight Investment said the funding ratio for U.S. corporate pension plans rose to 98.3% from 98.1% during July.
Assets increased by 4.2 percentage points, offsetting a 4-percentage-point increase in liability values. The average discount rate fell to 4.15% as of July 31 from 4.49% a month earlier, according to Insight.
Lastly, Aon in its own monthly report said the aggregate funding ratio of S&P 500 companies that sponsor defined benefit plans fell slightly to 93.5% as of July 29 from 93.9% as of June 30.
Aon said pension assets returned 4.4% during July and the interest rates used to value pension liabilities fell to 3.96% from 4.34%.
