Milliman, Inc., a premier global consulting and actuarial firm, today released the results of its latest Pension Funding Index, which consists of 100 of the nation’s largest defined benefit pension plans. In January, following a year of major improvement, these plans experienced a $7 billion decrease in asset value and a $60 billion increase in pension liabilities, driving a $67 billion decline in pension funded status. The blow to pension funded status follows an historic year that saw $318 billion in funded status improvement.

“After a win-win year that combined market growth and cooperative interest rates, we’re back to the lose-lose ways where assets fall and liabilities increase,” said John Ehrhardt, co-author of the Milliman Pension Funding Index. “Hopefully this is just a speed bump on the way to 100% funded status. Unfortunately we’re not quite as well positioned to achieve full funded status now as we were at the end of the year.”

Looking forward, if the Milliman 100 pension plans were to achieve the expected 7.5% median asset return for their pension portfolios, and if the current discount rate of 4.55% were maintained, funded status would improve, with the funded status deficit shrinking to $62 billion (96.1% funded ratio) by the end of 2014 and turning into a surplus of $29 billion (101.8% funded ratio) accumulating by the end of 2015.

Source: The Sacramento Bee