Funding levels of big pension plans jumped in January: Milliman
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Aided by higher interest rates, which reduced the value of liabilities as well as robust investment performance, the funding of pension plans sponsored by large publicly held U.S. employers leaped in January, Milliman Inc. said in an analysis released Thursday.
Defined benefit plans offered by the 100 U.S. employers with the largest pension programs were on average 81.7% funded as of Jan. 31. That's up from 76.5%, as of Dec. 31, and 74% as of Nov. 30.
In all, the plans were underfunded by $305 billion, compared with a $411 billion funding shortfall at the end of December. That $106 billion improvement in funded status was the second largest monthly gain in the 12 years Milliman has been conducting such studies.
“In January, we saw one of the more cooperative interest rate environments in recent memory,” John Ehrhardt, a Milliman consulting actuary in New York, said in the statement. “Over the course of 2012, plunging interest rates drove a ballooning pension funded status deficit. Now these rates have helped deflate that deficit. It's early, but $106 billion in improvement is welcome news.”
