NEPC’s monthly pension funded status monitor tracks the funded status of two hypothetical plans to gauge the impact of movements in markets, interest rates, and credit spreads on pension plans. The typical corporate pension plan increased its funded status in August, with total-return plans outperforming plans that hedge interest rate risk. The funded status for a typical total-return plan improved by a robust 7.3%, while an LDI-focused plan saw an increase of 3.7%, based on NEPC's hypothetical open- and frozen-pension plans. Gains were driven primarily by the continuing rally in equities and a decrease in liabilities as Treasury rates increased.
The funded status of the total-return plan increased by 7.3%, propelled by a strong rally in equities and an increase in Treasury rates which lowered liabilities.
The funded status of an LDI-focused plan increased by 3.7% as losses from long-duration fixed income were offset by gains in equities. The plan is currently 78% hedged as of August 31.