Corporate Pension Funding Inches Up in August

Consulting firms reported relatively small increases to their pension funding ratios last month, which resulted in corporate defined benefit pension funds continuing to achieve new surplus milestones.

The funded status of the 100 largest U.S. corporate defined benefit plans “inched ahead” to 112.2% in August, just 0.1 percentage points higher than July’s figure, according to Milliman Inc.’s Pension Funding Index. The market value of PFI plan assets rose by $5 billion due to August’s 0.92% investment return, greater than Milliman’s monthly expected investment return of 0.53% for 2026.

Zorast Wadia, the author of Milliman’s PFI and a principal in the firm, says August saw little movement relative to previous months in 2026 and the typical behavior of the index. In April, for instance, Milliman reported that roaring equity markets boosted the funded status by nearly 2 percentage points, amounting to $23 billion in asset-value growth.

Gallagher reported that interest rates remained steady in August, down only 0.02 percentage points from the end of July and up 0.50% from year-end 2025. Rates have been at 5.50% or greater for nine of the last 12 months and are 0.45% higher than they were one year ago, according to the firm’s August 2026 U.S. Pension Briefing.

“Interest rates were just about flat … resulting in a liability increase of $2 billion,” Wadia says. “But assets saved the day.”

MetLife Investment Management, the institutional asset management business of MetLife Inc., estimated that the average U.S. corporate pension funded status rose to 110% in August, up from 108.5% in July.

“Pension investments experienced positive returns across stocks, bonds and most alternative asset classes in August,” said Stephen Mullin, head of investment grade strategies at MIM, in a statement. “The gains in public equities, private equity and commodities drove the results.”

Discount rates began August at 5.75%, fell to a monthly low of 5.61% on August 4, and rose to a high of 5.79% on August 21 before dipping back to 5.77% at month-end, according to MIM’s report. Yields on 10-year Treasury bonds rose by 2 basis points, and AA-rated long corporate bond spreads widened by 2 bps, offset by a 2-bps decrease in other discount curve rates.

Wilshire’s pension finance monitor estimated that the aggregate corporate pension funding ratio increased to 111.9% in August, up from 111% in July. The change resulted from a 1.1-percentage point increase in asset values, which was partially offset by a 0.3-percentage-point increase in liability value.

“After two consecutive monthly declines, the Wilshire 5000 Index rebounded as strong technology-sector earnings and lower oil prices supported most asset classes, pushing U.S. equities to another all-time high during the month,” said Ned McGuire, Wilshire’s managing director, in a statement. “Corporate bond yields used to value pension liabilities declined slightly, as higher Treasury yields were more than offset by narrowing corporate credit spreads.”

In its monthly review, L&G Asset Management, America estimated that pension funded ratios increased to 111.8% in August from 110.6% in July. Equity performance remained positive over the month, with both global equities—represented by the MSCI All-Country World Total Gross Index—and the S&P 500 up 2.7%. Plan discount rates were projected to have increased by 2 bps over the month due to a 2-bps rise in the Treasury component and due to the credit component remaining relatively unchanged.

Dan Dreher, a strategist for L&G, says that while credit spreads can sometimes be a “larger driver of performance,” such as by reducing discount rates and therefore the value of liabilities when they widen, they are “not the story right now.” The past year has been “more of an equities story than otherwise,” he says, with a 40-to-50-bps interest rate rise helping as well.

Both plans tracked by October Three Consulting gained ground last month. Plan A, a traditional 60/40 equity/bond allocation portfolio, improved by 1 percentage point last month, while the more conservative Plan B, comprised of 80% bonds, gained a fraction of 1 percentage point. Plan A is now up 10 percentage points for the year, and Plan B remains up 2% through the first eight months of 2026.