The funded status of the typical U.S. corporate pension plan increased 5.1 percentage points to 87.5 percent in February, more than offsetting January's declines, as surging equity markets boosted assets and rising interest rates resulted in lower liabilities, according to the BNY Mellon Investment Strategy and Solutions Group.   

It was the best month for gains in the funded status of corporate plans since January 2011; and public plans, endowments and foundations had their best increases relative to their targets since February 2014, according to the BNY Mellon Institutional Scorecard.

For the typical U.S. corporate plan, assets in February rose 2.1 percent as U.S. stocks, international developed markets equities, and emerging markets equities all gained.  Liabilities for the typical corporate plan in February fell 3.9 percent as the Aa corporate discount rate rose 28 basis points to 3.84 percent.  

Plan liabilities are calculated using the yields of long-term investment grade bonds.  Higher yields on these bonds result in lower liabilities.  

Public defined benefit plans benefited from their allocations to U.S. large cap equities and high yield fixed income, while the returns of endowments and foundations were boosted by private equity and emerging markets equities. 

"The funded status for U.S. corporate plans is now in positive territory for 2015," said Andrew D. Wozniak, head of fiduciary solutions, ISSG.  "February capped the best three-month period for job growth in the U.S. in the last 17 years, and the strengthening employment situation was one of the important drivers of interest rates in February." 

Public defined benefit plans in February beat their targets by 2.4 percent as assets returned 3.0 percent, according to the monthly report.  Year over year, public plans remain below their return target by 1.9 percent, ISSG said.

For endowments and foundations, the real return in February was 3.0 percent as assets returned 3.0 percent, ISSG said.  Year over year, endowments and foundations are behind their inflation plus spending target by 0.9 percent, ISSG said.