Most traditional US corporate DB plans have seen double digit funded ratio improvements over the past several years, as a result of consecutive years of strong equity market performance ( S&P 500) and the rise in pension discount rates (FTSE discount curve). The funded ratios for many plans stand at north of 105%, which has been viewed as the magic number for plans to execute PRT without trigger additional contribution while achieving cost savings. For plans with funded ratios above 110%, PRT can also be an efficient way of unlocking surplus.
Given this backdrop, one should expect a stronger than normal PRT activities in 2025Q4 and 2026Q1, with a 3-6 month lead time.
With that being said, there could be more variability in PRT interest among well-funded mature plans, given the high level of uncertainty in the financial market environment, public policies and the labor market
PRT activity should be on the rise in 2025Q4 and 2026Q1. Here is why.
