June Pension Funding Outcomes See Minimal Change

The funded status of the 100 largest U.S. corporate defined benefit plans slipped to 109.5% in June, down 0.1 percentage points and $2 billion from May’s figure, according to Milliman’s Pension Funding Index.

Discount rates dropped by 1 percentage point, leading to a $1 billion rise in plan liabilities. June’s investment return of 0.42% was 0.11 percentage points below the monthly expected return of 0.53%, totaling a $1 billion loss.

“The [pension] surplus is still quite healthy,” says Zorast Wadia, the author of Milliman’s PFI and a principal in the firm. “But a greater theme might be, ‘What if what happened this month actually happened to a larger extent?’”

While shrinking asset returns and interest rates may not be particularly harmful to defined benefit plans in the short term, they would be more detrimental in the long term, Wadia explains. He warns that sustained, declining interest rates, coupled with a market downturn due to revived tensions between the U.S. and Iran, could “drain” plans’ surpluses.

“So far, at mid-year, we’re up,” Wadia says. “But [that] doesn’t necessarily mean the picture is all rosy.”

Funding Falls

MetLife estimated that the average U.S. corporate pension funded status fell to 105.7% in June from 107.2% in May, driven by investment losses and lower discount rates. In the second quarter of 2026, the funded status increased 0.8 percentage points.

“Funded levels continue to be very healthy. … That’s the overarching trend of the whole year,” says Jeff Passmore, a strategist for liability-driven-investing solutions at MetLife Investment Management and co-author of his firm’s monthly pension funding report. “However, June was a pullback on both sides of the balance sheet.”

Gallagher found discount rates decreased slightly during June to end the month at 5.7%, down 0.03 percentage points from the end of May.

Both model plans tracked by October Three Consulting lost ground in June. Plan A, a traditional 60/40 equity/bond allocation, declined less than 1 percentage point last month, while the more conservative Plan B, comprised of 80% bonds, also declined a fraction of 1 percentage point.

Staying Steady

Aon PLC, which tracks the daily funded status of pension funds of S&P 500 companies, estimated the funding ratio remained steady during June at 106.5%, up 2.1 percentage points for the quarter. Pension assets increased during the month by 0.3 percentage points, and interest rates were largely unchanged.

During Q2, pension liabilities increased, as interest rates decreased by 7 percentage points, Aon reported. Pension assets returned 5.1%, driven largely by a 15.4% increase in U.S. equities, per the Russell 3000 Index.

In its monthly review, L&G Asset Management, America estimated that the funding ratio remained unchanged in June at 110%. Muted market movements kept plan assets and liabilities relatively balanced.

One Improvement

Wilshire’s pension finance monitor estimated that the aggregate corporate pension funding ratio increased by 0.2 percentage points in June and 5.5 percentage points in Q2, ending the month at 108.7%.

“After a strong April and May, markets ended June slightly lower as investors grew cautious about valuations for some mega-cap technology stocks, even as the Wilshire 5000 Index posted its best quarterly return in five years,” said Ned McGuire, Wilshire’s managing director, in a statement. “Corporate bond yields … were largely unchanged, resulting in minimal movement in liability values. Strong quarterly equity returns continue to support the funded status of U.S. corporate pension plans in aggregate.”