The latest research from Mercer Investment Consulting shows that the aggregate deficit in pension plans sponsored by the companies listed on the S&P 1500 stands at $269 billion at the end of May. That figure is down from $557 billion at the end of December, and represents an aggregate funded ratio of 86%, up from 80% in April. That’s the highest funding level since July 2011.

The pension funding deficit hit a low of $689 billion in July 2012, with just 70% of pension obligations funded. The growth in pension funding is due to continuing gains in equities markets, which added 2.3% in May, and to the corporate bond markets, where yields rose by 46 basis points. The combination generated a reduction of 7% in estimated liabilities according to Mercer.

A Mercer analyst had this to say:

We have seen great leaps in funded status in the first half of 2013, and sponsors will certainly be hoping for more of the same over the coming months. This improvement dovetails nicely with feedback we are getting from clients who have implemented a glide path strategy — they are reaping the rewards of this rapid improvement and locking in gains.

Mercer estimates the aggregate assets in domestic qualified and non-qualified plans and all non-domestic plans reached $1.59 trillion at the end of May, compared with estimated total liabilities of $2.14 trillion.

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