Areport just released by the Segal Group indicates that thefunded status of the typical corporate pension plan in the UnitedStates declined from 95 percent at the end of 2013 to 92 percent atthe end of Q1/2014.

During the first quarter, domestic equities (as measured by theRussell 3000) slightly outperformed international equities (asmeasured by the Morgan Stanley Capital International All CountryWorld Index Ex-U.S.)—2 percent vs. 1 percent. Meanwhile, bonds (asmeasured by the Citigroup World Government Bond Index) bettered allstocks with a 2.66 percent gain.

The Segal Group report models the returns and funded status of ahypothetical pension plan that has a simple, passively investedasset allocation of 45 percent domestic equities, 15 percentinternational equities, and 40 percent global bonds. Although thehypothetical plan's assets increased in value by 2 percent inQ1/2014, its liabilities increased by 5 percent, after decliningfor the previous two quarters. That's because Q1/2014 saw a loweryield curve, due to declines in yields of around 30 percent forboth high-quality corporate bonds and Treasuries. The lower yieldsdecreased the model pension plan's effective interest rate and,thus, increased its liabilities.

“Individual plan results will differ from this model for a hostof reasons, including different funded positions, liabilityduration, and contribution patterns,” the Segal Group notes in itsreport. Nevertheless, the report advises: “Plan sponsors shouldexamine changes in their own defined-benefit plans' assets,liabilities, and funded ratios from the vantage point of accountingand funding metrics.”