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Falling interest rates hurt funding levels in large pension plans: Survey

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Falling Interest Rates

Impacted by falling interest rates, which boosted the value of liabilities, the funding levels of pension plans sponsored by large publicly held U.S. employers slipped in April, according to a survey released Thursday by Milliman Inc.

Defined benefit plans offered by the 100 U.S. employers with the largest pension programs were an average of 84.7% funded as of April 30, down from 85.3% in March and 85.6% in February.

“We keep slipping further and further away from full funding,” John Ehrhardt, a Milliman principal and consulting actuary in New York, said in a statement.

“The historic improvement of 2013 has been countered by a $72 billion decrease in funded status so far in 2014, with falling interest rates driving much of the change,” he added.

At the end of April, the plans had $1.427 trillion in assets and $1.685 trillion in liabilities, resulting in a funding deficit of $258 billion.

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