Firms that track defined benefit (DB) plan funded status reported a range of estimates for April—from a decrease of 0.1% to an increase of 4%, depending on the group of plans being tracked.

The highest increase reported was 4% (to an 80% aggregate funding level), estimated by Mercer for pension plans sponsored by S&P 1500 companies. The firm says this was the result of an increase in equity markets, which offset a decrease in discount rates. As of April 30, the estimated aggregate deficit of $490 billion decreased by $86 billion as compared to $576 billion measured at the end of March, according to Mercer.

The S&P 500 index increased 12.68% and the MSCI EAFE index increased 6.29% in April. Typical discount rates for pension plans as measured by the Mercer Yield Curve decreased from 3.04% to 2.77%.

“Despite a dip in discount rates, we saw funded status rise in April due to a nice rebound in the equity markets,” says Matt McDaniel, a partner in Mercer’s Wealth business. “Equity volatility, while still high, trended downward in April, but significant risk remains in equity markets.”

He adds: “Plan sponsors looking to reduce risk should take note that pension risk transfer [PRT] markets have continued to function smoothly throughout the pandemic. Even in this uncertain market, insurers are offering very attractive pricing to take on pension liabilities, with many plan sponsors able to transact at or below their balance sheet liability.”

An estimate of the combined assets and liabilities of corporate pension plans sponsored by S&P 500 companies with a duration in line with the FTSE Pension Liability Index–Intermediate by Wilshire Associates finds a 2.2 percentage point increase in April to end the month at 83.2%. The firm says the monthly change in funding resulted from a 6.3% increase in asset values partially offset by a 3.6% increase in liability values.

The aggregate funded ratio is estimated to have decreased by 5.4 percentage points and 7.6 percentage points year-to-date and over the trailing 12 months, respectively. “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,” says Ned McGuire, managing director and a member of the Investment Management & Research Group of Wilshire Consulting.

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