NEPC's Third Quarter 2025 Pension Monitor

International and domestic equities posted significant gains in the third quarter, further cementing year-to-date returns. As a result, funded ratio improved for many plan sponsors. During the quarter, the 30-year Treasury yield decreased five basis points to 4.73%. Credit spreads remained tight with long credit spreads declining 11 basis point in the three months ended September 30. The discount rate for the open total-return plan decreased 16 basis points to 5.49% and the discount rate for the frozen LDI-focused plan fell 17 basis points to 5.27%.

We estimate the funded status of our total-return plan rose about 2.6% over the quarter. As a result of gains in return-seeking assets, our LDI-focused plan experienced a funded status increase of 2.9%.¹

Total-return plans may want to consider the impact of rate volatility on plan liabilities and the role of LDI in light of the current rate environment. For certain plan sponsors, lower rates may increase liabilities and reduce funded status, which could lead to higher required contributions and PBGC variable-rate premiums. NEPC consultants are available to discuss the impact and cost of various pension finance and de-risking strategies given rate movements and volatility in the market.

¹ Source: Factset

Recent Corporate Pension Headlines

PRT Litigation Update:

NEPC continues to monitor the ongoing litigation and volume of pension risk transfers, providing quarterly updates to clients. In the third quarter, the tension between dismissals and denials persisted, with the cases against General Electric and AT&T dismissed, while the Bristol Meyers motion to dismiss was denied. Further, there was a new lawsuit filed against IBM and its independent fiduciary. The overhanging litigation appears to be a key concern fueling the sharp drop off in PRT transactions through the most recently reported quarter ending June 30. According to LIMRA data, PRT sales declined by about 45% in the second quarter from the first quarter. NEPC will continue to monitor the situation and report to clients.