Defined benefit (DB) pension funding improved across all seven major markets tracked by WTW during the second quarter of 2026, as positive investment returns generally outweighed increases in liabilities.

WTW’s latest Global Pension Finance Watch showed that the US recorded the greatest quarterly improvement, with its pension index rising by 7.5 per cent after benchmark investment returns of 9.3 per cent more than offset liability growth of 1.7 per cent.

Japan recorded the second-largest increase, with its pension index rising by 6.5 per cent.

Its benchmark portfolio returned 3.8 per cent, while liabilities fell by 2.5 per cent following a 27-basis-point increase in the benchmark discount rate.

The Swiss pension index increased by 5.4 per cent during the quarter, supported by a 5.6 per cent investment return and limited liability growth of 0.2 per cent.

Meanwhile, the Eurozone pension index rose by 4.1 per cent, as a 6 per cent return on the benchmark portfolio outweighed a 1.8 per cent increase in liabilities.

Canada’s pension index improved by 2.8 per cent, with investment returns of 6.4 per cent offsetting liability growth of 3.5 per cent, while Brazil’s index rose by 2.4 per cent as a 2 per cent fall in liabilities compensated for comparatively modest investment returns of 0.3 per cent.

The UK recorded the smallest quarterly improvement, with its pension index rising by just 0.3 per cent.

Although the benchmark portfolio returned 3.7 per cent, liabilities increased by 3.4 per cent after the benchmark discount rate fell by 15 basis points to 6.01 per cent.

Over the 12 months to the end of June 2026, Japan recorded the greatest improvement in the pension index at 23.6 per cent, followed by the Eurozone at 15.9 per cent.

Brazil and the US recorded annual increases of 10.4 per cent and 10.2 per cent respectively, while Canada rose by 7.5 per cent and the UK by 6.2 per cent.

Switzerland recorded the smallest 12-month increase, at 4.9 per cent.

WTW noted that investment returns were positive across all countries during the second quarter, while benchmark discount rates remained relatively stable.

The most notable discount rate reductions were recorded in Canada and the UK, while Brazil and Japan experienced increases.

Meanwhile, liability values increased across all markets except Brazil and Japan.

WTW cautioned that the report provided a “point-in-time” assessment at the end of each quarter and stressed that recent market volatility underlined the importance of more frequent monitoring.

It argued that organisations monitoring funded status and other pension financial metrics in real time were better positioned to act quickly as market conditions changed and had generally been more successful in achieving their cost and risk management objectives.

The consultancy added that monitoring should be tailored to the characteristics of each pension plan and its supporting assets, particularly when financial data is used to inform business decisions.

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