The nation’s 100 largest defined benefit plans experienced a $26 billion increase in asset value and a $2 billion increase in pension liabilities in July, according to Milliman’s Pension Funding Index. The pension funding deficit dropped from $182 billion at the end of June to $158 billion at the end of July.
“The last 12 months were the best 12-month period for corporate pension funded status in the history of our study,” said John Ehrhardt, co-author of the Milliman Pension Funding Index. “We’ve seen gains in nine out of the last 12 months for a total improvement of $388 billion. [By comparison], the total projected benefit obligation for these 100 pensions stood at $762 billion when we started analyzing these 100 plans 13 years ago.”
Year-to-date, there’s been a $233 billion improvement in funded status and an increase in the funded ratio to 89.7%, with assets up $60 billion and the projected benefit obligation down $172 billion.
Milliman said that if the 100 pension plans in its index achieve the expected 7.5% median asset return for their pension plan portfolios, and if the current discount rate of 4.73% were maintained, the funded status deficit would narrow to $128 billion (91.7%) by the end of 2013 and $44 billion (97.2%) by the end of 2014.
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