In May, pension plan sponsors with allocations to global equities likely experienced continued improvement in funded status. Funded ratios for both the hypothetical total-return and LDI-focused plans increased, driven by strong performance in return-seeking assets alongside a modest rise in Treasury yields and tightening corporate bond spreads. The Treasury yield curve shifted upward across all tenors, led by the short end; 10- and 30-year yields rose to 4.45% and 4.99%, respectively.
The discount rate for NEPC’s hypothetical total-return pension plan declined five basis points to 5.75%, while the frozen LDI-focused plan decreased four basis points to 5.54%. Although these changes modestly increased liabilities, gains in return-seeking assets more than offset the impact. As a result, funded status improved by 2.1% for the total-return plan and by 2.0% for the LDI-focused plan.
Given strong equity performance and muted fixed income returns in recent months, some pension plans may have reached their next glide path trigger or achieved a sufficiently favorable funded position to consider de-risking. We suggest ongoing monitoring of funded status to determine whether glide path thresholds have been met and to assess the timing and execution of any glide path implementation to help protect and preserve recent gains.
Sources: FactSet, FTSE and Brentwood LLC, as of May 31, 2026
Rate Movement
Retiree Buyout Index
The Buyout Index for retirees is estimated to be approximately 106.6% of PBO, as of May 31, 2026.
Recent Insights from NEPC
Powell Plays the Long (Political) Game
Recent Corporate Pension Headlines
The recent favorable news for sponsors in pension risk transfer litigation and other ERISA retirement plan cases may have more tailwinds. The new head of the Employee Benefits Security Administration (EBSA) Daniel Aronowitz emphasized the goal of de-litigation for ERISA plans in his address to the PLANSPONSOR National Conference on June 1st. A key goal of the Aronowitz-led EBSA is to allow fiduciaries to go about their business prudently without fear of being sued. Pension risk transfer (PRT) cases were cited among other ERISA class action lawsuits in his remarks. While the news has been good of late, NEPC will continue to monitor and report any updates on the outstanding PRT litigation to clients.
Sources:
Van Bramer, J. (2026, June 1). EBSA’s Aronowitz stresses goal of limiting litigation, speedy finalization of alts rule. PLANSPONSOR. https://www.plansponsor.com/ebsas-aronowitz-stresses-de-litigation-focus-speedy-finalization-of-alts-rule/
