Pension funding status improves in Q2

The funding ratio of the typical U.S. pension plan increased sharply during the second quarter of 2013, new research shows.

UBS Global Asset Management discloses this finding in its latest U.S. Pension Fund Fitness Tracker. The industry benchmark combines asset and liability returns, and measures the impact of a “typical” investment strategy on the funding ratio of a model defined benefit plan in the U.S. due to interest rollup, change in interest rates and typical asset performance, but excludes unique plan factors, such as service cost and benefit payments.

The Tracker rose 6 percentage points to 88 percent during the second quarter. Combined with gains in the first quarter, the estimated year-to-date total improvement in funding ratio is close to 11 percentage points.

“The improvement in funding ratio for the second quarter was driven primarily by a 6.1 percent drop in liability values,” the report states. “Asset values are estimated to have increased by a modest 0.4 percent, based on the average corporate plan’s reported asset allocation weightings from the UBS Global Asset Management Pension 500 Database and publicly available benchmark information.”