Despite losses in equities and fixed income, the funded status of most U.S. corporate pension plans rose in the first quarter driven by higher Treasury yields. Concerns around persistent inflation and the war in Ukraine pushed equities into correction territory with losses of over 15%, before a partial recovery in March. In addition, the Federal Reserve began hiking interest rates in the quarter, resulting in an uptick in Treasury yields and credit spreads. As a result, estimated plan liabilities, based on long-duration fixed-income yields, fell in the three months ended March 31. Despite the volatility in the first quarter, the funded status of a total return plan increased 7.6% and the LDI-focused plan rose 1.2%.

The funded status of the total-return plan increased 7.6% in the first quarter as higher yields and lower liabilities outpaced losses from equities.

The LDI-focused plan saw funded status gain in the first quarter as interest rates increased and credit spreads widened, offsetting asset losses. The plan is 79% hedged as of March 31.

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