A monthly update highlighting key market indicators that are most relevant for pension plans
LGIM America estimates that pension funding ratios increased ~1.6% throughout August, primarily due to the strong global equity performance. Our calculations indicate the discount rate’s Treasury component rose 3 basis points while the credit component widened 2 basis points, resulting in a net increase of 5 basis points.1 Overall, liabilities for the average plan decreased 0.3%, while plan assets with a traditional “60/40” asset allocation grew by ~1.4%.2
Source: Bloomberg and LGIM America as of August 31, 2021. Numbers shown above may not add up due to rounding.
1. Discount rates based on a blend of the Intercontinental Exchange Mature US Pension Plan AAA-A and Intercontinental Exchange Retired US Pension Plan AAA-A discount curves.
2. For the average plan LGIM America assumes a 60% allocation to MSCI AC World and a 40% allocation to Bloomberg Aggregate.