The funding status of an average U.S. corporate pension plan improved by 6.4 percentage points in March, according to new statistics.
The estimate, published by the Bank of New York (BNY) Mellon Asset Management, credited a strong stock market rally and wider spreads for corporate bonds with the much-needed boost.
"This was, by far, the best month for pension plans since the funding status of these plans began deteriorating in May 2008," said Peter Austin, executive director of BNY Mellon Pension Services.
In addition to the stock market rebound, long AA corporate bond yields rose 60 basis points in March, contributing to an increase in the AA corporate rate from 6.84 percent to 7.19 percent and driving down the value of liabilities, he added.
According to the BNY Mellon Pension Liability Index, assets for a typical moderate risk portfolio increased 5.6 percent, while liabilities fell 3.5 percent during the month. For the year to date, the funding ratio for the average plan is up 5.7 percentage points.
However, the experts caution that plans face the threat of narrowing spreads and lower yields as corporate bond yields are significantly over their historic levels.