Most U.S. corporate pension plans’ funded status remained relatively flat in the third quarter, despite interest hedging techniques. With Treasury yields recovering from quarter-long lows and credit spreads inching higher over the three months ended September 30, estimated plan liabilities decreased, but so did asset returns. The equity market started to show some chinks in its armor as volatility increased. During the third quarter, the funded status of a total-return plan increased a modest 0.1%, underperforming the LDI-focused plan which increased 0.2%.

The funded status of the total-return plan remained flat over the quarter as equity markets backtracked and rates made a roundtrip during the quarter.

The LDI-focused plan saw a small increase in funded status over the quarter as yields ended relatively flat by quarter end. The plan is 86.5% hedged as of September 30.

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