Pension plan funding levels decline in October: Milliman

Funding levels of pension plans sponsored by large publicly held U.S. employers moved down in October as lower interest rates boosted the value of plan liabilities, Milliman Inc. said in an analysis released Wednesday.

Defined benefit plans offered by the 100 U.S. employers with the largest pension programs were an average of 72.6% funded as of Oct. 31, down from 74.5% funded as of Sept. 30, and sharply lower compared with the 78.7% funded ratio at the end of 2011.

In all, the plans’ aggregate funding deficit increased by $45 billion last month. At the end of October, the value of aggregate plan assets was $1.322 trillion, while the value of plan liabilities was $1.821 trillion.

That resulted in a $498 billion deficit compared with a $453 billion deficit at the end of September.

“If historically low interest rates persist, it will be hard to put distance from a funding deficit of half a trillion dollars,” John Ehrhardt, a Milliman consulting actuary in New York and co-author of the analysis, said in a statement.