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Market slump, low interest rates ding largest pension plans

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Hit by a downturn in the equities markets and falling interest rates that boosted the value of liabilities, the funded status of very large pension plans slipped in September, according to a Milliman Inc. survey released Friday.

Defined benefit plans offered by U.S. employers with the 100 largest pension programs were an average of 81.7% funded as of Sept. 30, down from 83.3% funded as of Aug. 31.

“The calendar year began with a strong equity performance that seemed so promising, and yet here we are looking at overall decline in equities for the year,” John Ehrhardt, a Milliman principal and consulting actuary in New York, said in a statement.

At the end of September, the plans had $1.396 trillion in assets and $1.708 trillion in liabilities, resulting in a funding deficit of about $312 billion. That is an increase of about $28 billion compared with the end of August, when the funding shortfall was about $282 billion.