Corporate pension surpluses continue to grow, second quarter stats reveal

Those relying on a corporate defined benefit pension to provide them with a comfortable retirement will be buoyed by recent reports highlighting their strength.

The second quarter of 2025 has delivered another strong result for these plans with funded status improvements continuing to reflect the dual tailwinds of equity strength and stabilized liabilities.

MetLife Investment Management, with approximately $600 billion AUM, estimates that   the average funded ratio rose to 105.1% by June 30, up from 103.0% at the end of the first quarter.

Other major pension benchmarks reinforce this upward momentum. Wilshire’s most recent update pegged June's funded ratio at approximately 101.2%, noting a 3.9 percentage point improvement in Q2 alone and Milliman’s June Pension Funding Index reported that funded status reached 104.9% and projected further gains to 105.8% by year-end and possibly 107.3% by 2026.

All three sources cite strong stock market performance as the primary catalyst for the increase in funded ratios.

MIM reported double-digit returns in both domestic and international equities during the second quarter, contributing 2.3 percentage points to funded status gains. Wilshire similarly noted a 2.7 percentage point asset boost in June.

Even with minor upticks in liabilities due to interest cost and benefit accruals, rising asset values more than made up the difference and interest rates went up slightly during the second quarter, enough to help steady the value of pension obligations.

MetLife saw rates rise from 5.26% to 5.37%, and Milliman reported a similar increase in June. These small changes helped keep pension liabilities from growing too much, which means that gains from strong investment returns weren’t dragged down.

For plan sponsors, this created a rare period where both sides of the pension equation were working in their favor.

However, the quarter wasn’t without volatility. MIM noted daily swings in funded status from a low of 100.8% on April 2 to a high of 106.1% by May 21, highlighting the importance of managing intra-quarter risk.

With funding levels at their highest in years, the conversation is shifting.

Wilshire and Milliman both point to increased interest in risk transfer and de-risking strategies, such as liability-driven investment overlays or annuity purchases. This is particularly relevant for sponsors looking to lock in gains before volatility erodes them.