The funding levels of pension plans sponsored by large publicly held U.S. employers fell nearly $5 billion in March, primarily due to asset underperformance and interest rate decreases, according to a new report by Milliman Inc.
The combined plan assets of the 100 largest defined benefit pension plans sponsored by publicly traded U.S. employers were essentially flat last month, while pension liabilities increased by $4.6 billion, resulting in a net funded ratio of 84% as of March 31, the Seattle-based actuarial firm said in its monthly “Milliman 100 Pension Funding Index Report,” released Tuesday.
Milliman's PFI report for the month of April also included revised plan asset and liability totals among the 100 studied plans for the first two months of 2014 and year-end totals for 2013, based on the sponsoring companies' updated financial statements.
According to the report, pension liabilities among the plans were $66 billion higher than Milliman had previously projected, while the actual combined value of the plan assets was $47 billion lower than projected.
The adjustments to the year-end 2013 combined plan asset value and liabilities resulted in a $113 billion decrease in the plans' funding levels as of Dec. 31. Accordingly, the plans' average funded ratio at the end of 2013 was revised down to 88.3% from the previously projected 95.2%.
Similarly, Milliman revised down the plan results it previously reported for the first two months of 2014. The plans' average funded ratio in January was slashed to 83.8% from the previously reported 91.2%, while the funded ratio for the month of February was reduced to 84.3% from 91.8%.
“It was a brutal first quarter, with the deficit for these 100 pensions climbing by $79 billion,” John Ehrhardt, a Milliman principal and consulting actuary in New York, said in a statement. “Funded status greatly improved during 2013, but things have changed course in the first quarter of 2014.”