Fueled by robust investment returns and higher interest rates that reduced the value of liabilities, funding levels of pension plans sponsored by large publicly held U.S. employers rose in November, climbing to just under 94%, Milliman Inc. said Wednesday.
Defined benefit plans offered by the 100 U.S. employers with the largest pension programs were an average of 93.9% funded, up from 91.9% funded at the end October and 91.5% at the end of September.
“Pension assets have improved by more than 10% this year, and the pension liabilities have steeply declined. Now we just wait and see how the year concludes, with all eyes focused on both discount rates and financial markets,” John Ehrhardt, a Milliman consulting actuary in New York, said in a statement.
Since the end of 2012, pension funding levels, fueled by positive investment results and higher interest rates, have sharply improved. At the end of 2012, plans, on average, were 77.2% funded compared with November's 93.9% average funded level.
In November, the value of assets held by the plans rose to $1.440 trillion, an increase of $11 billion from October, while the value of plan liabilities fell by about $23 billion to $1.533 trillion. That lowered the plans' aggregate funding deficit to about $93 billion at the end of November compared with an aggregate funding shortfall of about $126 billion as of Oct. 31.