Pension plan funding levels improve in January: Milliman

The funding levels of pension plans sponsored by large publicly held U.S. employers rebounded in January, aided by strong investment returns and steady interest rates, Milliman Inc. said an analysis released Monday.

Defined benefit plans offered by the 100 U.S. employers with the largest pension programs were on average 74.2% funded as of Jan. 31, up from 72.4% as Dec. 31.

With interest rates remaining near steady, pension plans were able to “take advantage of a 2.49% investment gain for the month and recoup some of the funding loss that characterized 2011,” John Ehrhardt, a Milliman principal in New York, said in a statement.

Still, pension plan funding levels remain sharply lower compared with the first quarter of 2011, when funding levels were 87.7% at the end of March, the 2011 peak.

Funding levels began to fall steeply in July as interest rates slumped to historic lows, which boosted the value of plan liabilities.

At 72.4%, the December funded ratio was only slightly above the lowest monthly funded ratio, which was 70.5%, set in May 2003.