Pension plan funding drops to lowest of the year: Milliman

The funding levels of pension plans sponsored by large publicly held U.S. employers fell to their lowest levels of the year in September, Milliman Inc. said in an analysis released Thursday.

Defined benefit plans offered by the 100 U.S. employers with the largest pension programs were on average 72.8% funded as of Sept. 30. That's down from 79.3% in August and 84.1% at the end of last year, according to the Seattle-based consulting and actuarial firm.

“September was a historically awful month for pensions and we're getting close to the worst funded ratio in the history of the study,” John Ehrhardt a co-author of the study and a Milliman principal in New York.

In all, the difference between plan assets and liabilities increased $124.5 billion in September, the largest monthly drop in the largest pension plans' funded status in the 11 years that Milliman has been tracking such changes.

The market value of assets held by the pension plans slipped to $1.175 trillion in September from $1.206 trillion in August. Plan liabilities shot up to $1.614 trillion from $1.521 trillion due to the “two-fold effect of investment losses, coupled with the decrease in corporate bond rates that are the benchmarks used to value plan liabilities,” according to the analysis written by Mr. Ehrhardt and Zorast Wadia, a Milliman principal in New York.