Pension plan funding climbs sharply in March: Milliman

Funding levels of pension plans sponsored by large publicly held U.S. employers rose sharply in March due to rising interest rates that fueled a sharp drop in plan liabilities, Milliman Inc. said in an analysis released Thursday.

Defined benefit plans offered by the 100 U.S. employers with the largest pension programs were an average of 85.1% funded as of March 31, up from 82% at the end of February and 81.1% at the end of January.

In all, plan liabilities fell to $1.526 trillion at the end of March, a $54 billion decline compared with the end of February. The market value of plan assets rose by $4 billion to $1.299 trillion.

“The pairing of asset improvement and a significant reduction in liabilities makes March the first good news/good news month we have seen this year,” John Ehrhardt, a Milliman consulting actuary in New York and co-author of the analysis, said in a statement.

Still, even with the recent improvement in plan's funded status, pension plan funding levels remain sharply lower compared with the first quarter of 2011, when plans were an average of 89.6% funded.

Pension plan funding peaked last year at 90.6% at the end of May. Funding then tumbled as interest rates slumped to historic lows, which boosted the value of plan liabilities.