Jan. 7, 2013
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 corporate defined benefit pension plans. In December, these pensions experienced a
increase in funded status based on a
decrease in the pension benefit obligation (PBO) and a
increase in assets. The
improvement in December follows a
improvement in November, but it would still take many more months of improvement to make up for a year of ballooning pension deficit. At year end, the deficit of
higher than it was when 2011 ended.
"It was a good year on the asset side, with these pensions experiencing a
, co-author of the Milliman Pension Funding Study. "But it was a rough year on the liability side, with interest rates driving a
increase in the pension benefit obligation. People may be getting tired of hearing me saying it but interest rates have been the story for the last four years and that's not going to change in 2013."
In December, the discount rate used to calculate pension liabilities increased from 4.05% to 4.18%, decreasing the PBO from
at the end of the month. The overall asset value for these 100 pensions increased from
Looking forward, if these 100 pensions were to achieve their expected 7.8% median asset return and if the current discount rate of 4.18% were to be maintained throughout 2013 and 2014, these pensions would improve the pension funded ratio from 76.4% to 81.0% by the end of 2013 and to 85.7% by the end of 2014.