Large employer pension plan funding levels up near 92% in October

Fueled by robust investment returns, funding levels of pension plans sponsored by large publicly held U.S. employers rose in October, climbing to just under 92%, Milliman Inc. said Thursday.

Defined benefit plans offered by the 100 U.S. employers with the largest pension programs were an average of 91.9% funded, up from 91.5% at the end of September and 89.3% as of Aug. 31.

“We faced a frightening funded status at this time last year, with the discount rate reaching 3.96%, one of the lowest in the 13-year history of this study,” John Ehrhardt, a Milliman consulting actuary in New York, said in a statement.

“Twelve months and $392 billion worth of improvement later, we are on track to end the year better than 90% funded,” he added.

Since the end of 2012, pension funding levels, fueled by positive investment results and higher interest rates, which lower the value of plan liabilities, have sharply improved. At the end of 2012, plans, on average, were 77.2% funded compared with October's 91.9% average funded level.

In October, the value of assets held by the plans rose to $1.429 trillion, an increase of $31 billion from September, while the value of plan liabilities rose by about $28 billion to $1.556 trillion. That lowered the plans' aggregate funding deficit to about $126 billion at the end of October compared with an aggregate funding shortfall of about $129 billion as of Sept. 30.