The funded status of the typical U.S. corporate pension plan rose 5.6 percentage points in May 2013 to 86.4 percent, the highest level since July 2011, according to the BNY Mellon Investment Strategy & Solutions Group (ISSG). Year to date, the funded ratio is up 10.1 percentage points, ISSG said.

The improvement was driven by a jump in the Aa corporate discount rate, which drove liabilities sharply lower, according to the BNY Mellon Pension Summary Report for May 2013.  Liabilities for the typical corporate plan fell 6.3 percent as the discount rate on the Aa corporate bonds increased 43 basis points to 3.13 percent, the sharpest rise in nearly two years, the report said.  Plan liabilities are calculated using the yields of long-term investment grade bonds.  Higher yields on these bonds result in lower liabilities.

Assets for the typical corporate plan increased 0.2 percent as U.S. equity markets rose, the report said.

"Signs that the quantitative easing program will end coupled with rising consumer confidence are making bonds less attractive, which is sending interest rates higher," said Jeffrey B. Saef , managing director, BNY Mellon Investment Management, and head of the ISSG. "Corporate plans are in much better shape and expressing increasing interest in strategies that could protect them from future funded status volatility."