Corporate Pension Funding Ratios Continued to Decline in March

The funded status of U.S. corporate pension plans continued to fall in March, primarily as a result of a significant decline in equities during the month. Corporate funding ratios have largely increased month over month for the past year, but declined in both February and March.

The value of pension plan liabilities declined during the month, a result of a rise in the discount rates used to value these liabilities, but any decline in the value of liabilities was offset by a decline in asset values, primarily driven by the decline of the stock market.

According to Milliman, the funded surpluses of the largest 100 U.S. corporate pension plans fell by $7 billion during March; the funding ratios of these plans fell to 104.1%, down from 104.6% in February.

Pension liabilities fell by $18 billion to $1.25 trillion during March, according to Milliman. Pension assets fell by $25 billion during the month to $1.3 trillion, a result of investment returns of negative 1.38%.

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Mercer reported that the pension funds of companies in the S&P 500 saw their funded status decline to 103% from 105% during March. Asset surpluses declined to $40 billion, from $83 billion in February.

WTW’s pension index fell for the second consecutive month, as declines in asset values offset decreases in the value of liabilities, a result of an increase in discount rates. The index fell 1.7 points to 118.2 in the month of March.

According to MetLife Investment Management, the average corporate pension funding ratio fell to 103%, down from a high of 107.2% in the first quarter of the year.

Wilshire reported the aggregate funding ratio for U.S. corporate pension plans fell by 1% in March to 103%. According to the firm, asset values declined by 2.2%, which partially offset a 1.3% decrease in the value of plan liabilities. The funded ratio of corporate pension plans was 99.7% in March 2024, according to Wilshire.

“The liability value decreased as corporate bond yields, which are used to value corporate pension liabilities, increased, partially offsetting the asset value decline,” said Ned McGuire, managing director at Wilshire, in a statement. “The estimated funded ratio at the end of March continues to show overfunding, maintaining the trend observed over the past twelve months.”

According to October Three Consulting, pensions with a traditional 60/40 portfolio saw their funded status fall to just under 97% from around 99%. A plan with a 20/80 portfolio saw its funded status decline to just under 99% from just under 100%. The funded status of a 60/40 portfolio fell by 2% in during the month, while a largely retired 20/80 plan saw its funded status decline by 1%.

Equities Fall

In March, the S&P 500 Index declined 5.6%, and the Russell 2500 Index of small companies fell 6.3%. Wilshire’s McGuire noted that the Magnificent Seven large-cap technology stocks, which led stocks significantly higher in 2024, had their worst quarter on record.

“While the slight rise in discount rates in March led to a monthly decline in plan liabilities, plan assets fell even further due to poor market performance, which caused the funded status to fall below the 104.8% level seen at the beginning of 2025,” said Zorast Wadia, principal and consulting actuary at Milliman, in a statement.

Wadia wrote that due to fresh inflation fears and potential changes to the federal funds rate looming, plan sponsors should consider asset-liability matching strategies to preserve the funding surplus improvements achieved over the past year.