Largest pension plans' funding improves: Analysis

The funding levels of pension plans among large publicly held U.S. employers improved slightly in 2009 due to strong investment returns, according to a survey released Tuesday.

Defined benefit plans offered by 100 U.S. employers with the largest pension programs were, on average, 81.7% funded in 2009, up from 79.4% in 2008, according to the Milliman Inc. survey.

That improvement was the result of solid investment gains, according to the survey. On average, plans earned 14.1% on assets, a huge turnaround from 2008 when investment losses averaged 18.9%.

The turnaround would have been even bigger except for falling discount rates used to measure plan liabilities, according to the survey. A fall in discount rates inflates the value of plan liabilities for reporting purposes.

In all, the market value of plan assets increased about $112 billion to nearly $1.09 trillion in 2009. On the other hand, the value of plan obligations increased by just more than $100 billion to $1.33 trillion, Milliman said.

Even with the improvement in funded status, plans’ funded ratio in 2009 was the second-lowest since the actuarial consulting firm began surveys in 1999. The lowest average funded ratio was 79.4% in 2008 and the highest was 130% in 1999.

The Seattle-based firm analyzed financial reports of publicly held companies sponsoring the 100 largest pension programs for which full-year data was available.

The survey is available at www.milliman.com.