Pension Finances Experience Mixed Movement in November

Pension finances experienced a modest pullback in November, marking the first negative month since March, according to October Three Consulting’s “November Pension Finance Update.” Meanwhile, some measures reported a small increase in funding levels over the same period.

Both model plans October Three tracks lost ground last month. Plan A, a traditional 60/40 equity/bond allocation, lost almost 1%, ending November up 6% for the year. The more conservative Plan B, comprised of 80% bonds, lost a fraction of 1% last month but remains up more than 1% through the first eleven months of 2025, according to the update.

Stock performance was mixed in November, as October Three’s diversified portfolio of five major indexes remained flat. Corporate bond yields fell a few basis points during the month, resulting in a liability increase of less than 1%.

“Into each life some rain must fall,” says Brian Donohue, a partner in October Three Consulting, quoting Henry Wadsworth Longfellow’s poem, “The Rainy Day.”

“You expect stocks to outperform bonds, but not all the time,” Donahue says.

L&G Asset Management, America also reported a slight decrease in the average pension funding ratio, to 105.2% at the end of November from 105.5% in October.

Plan liabilities increased over the month due to a 6-basis-point decrease in plan discount rates and relatively unchanged credit spreads, according to L&G. Equity markets delivered positive performance, with global stocks rising 0.02% and the S&P 500 up 0.25%. Ultimately, liability growth outpaced assets: The former rose 0.7%, while the latter grew only 0.3%.

Aon, which tracks the daily funded status for S&P 500 companies with defined benefit plans, estimated the funding ratio decreased in November to 102.7% from 102.9% in October. According to Aon, assets returned 0.3% during November, driven primarily by a 0.3% increase in U.S. equities and a 0.5% increase in long-duration corporate bond yields. However, interest rates used to discount pension liabilities decreased by 2 bps for the average plan, increasing pension liabilities and thereby offsetting positive returns.

Mercer found that the aggregate funding level of pension plans sponsored by S&P 1500 companies remained level at 109% in November, driven by a decrease in discount rates offset by a slight increase in equities. Typical discount rates for pension plans, as measured by the Mercer Yield Curve, decreased marginally, to 5.32% from 5.33%.

Gallagher reported that discount rates stayed flat during November, ending the month at 5.45%, a 0.02-percentage-point increase from the end of October. November was the second consecutive month in which the change was less than 0.02 percentage points; the increase reflected the smallest monthly change in the FTSE Pension Liability index since May 2020.

The funded status of the largest 100 corporate DB plans inched up to 107.1% in November from 107.0% at the end of October, according to Milliman. The market value of plan assets decreased by $1 billion, however, to $1.325 trillion, attributable to a poor investment return of 0.44% over the month.

The aggregate funding ratio for corporate pension plans sponsored by S&P 500 companies with a duration in line with the FTSE Pension Liability Index-Short is estimated to have increased by a modest 0.3 percentage points to 103.7%, according to Wilshire’s monitor. Asset value increased by 0.1 percentage points, while liabilities decreased by the same margin.