U.S. corporate pension plan funding holds steady in July above 93% – 3 reports

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.

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