Insights

The funded status of most U.S. corporate pension plans increased in the fourth quarter, driven by gains from high-return assets. Capital markets in the fourth quarter improved and short-term interest rates increased by another 75 basis points. During the quarter, the Federal Reserve delivered rate hikes of 75 and 50 basis points. Estimated plan liabilities based on long-duration fixed-income yields were higher in the fourth quarter, but strong asset returns drove funded status gains for the three months ended December 31. The funded status of a total-return plan rose 5.5% with lower allocations to long-duration fixed income, and the LDI-focused plan saw its funded status go up 4%.