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Member, Beacon International Group, Ltd.
The funded status of very large pension plans sponsored by public companies slipped in December but ended up slightly higher at year-end 2015 compared with a year earlier, according to a Milliman Inc. survey released Wednesday.
Defined benefit plans offered by U.S. employers with the 100 largest pension programs were an average of 82.7% funded as of Dec. 31, down from 83.3% as of Nov. 30, but slightly higher than Dec. 31, 2014, when plans were an average of 81.5% funded.
“The good news is that the pension funded status improved in 2015. The bad news is that this improvement was underwhelming and we’re basically in the same place we were a year ago, despite cooperative interest rates,” Zorast Wadia, a Milliman principal and consulting actuary in New York, said in a statement.
The funded status of plans moved up and down during 2015, a function of changes in interest rates and equity market performance. In 2015, plan funding on a monthly basis was highest at 85.5% as of June 30, and the lowest at 77.5% as of Jan. 31.
At the end of December, the plans had $1.410 trillion in assets and $1.705 trillion in liabilities, resulting in a funding deficit of around $295 billion and a decrease of about $35 billion compared with Dec. 31, 2014.
Large pension plan funding levels slipped in 2015 as higher interest rates, which decreased the value of pension liabilities, were not enough to offset subpar investment returns, according to an Aon Hewitt survey.