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Administration October 4, 2012
Pensions See $45B September Increase in Funding
October 4, 2012 (PLANSPONSOR.com) – In September, pensions experienced a $45 billion increase in funded status, according to the Milliman Pension Funding Index.
Reported by Rebecca Moore
The Index, consisting of 100 of the nation’s largest defined benefit (DB) pension plans, showed a $30 billion reduction in the pension benefit obligation (PBO) and a $15 billion asset improvement. The $45 billion increase in funded status means these pensions have reduced their cumulative funding deficit by $80 billion in the last two months, following a four-month slide of $304 billion.
In September, the discount rate used to calculate pension liabilities increased from 3.99% to 4.08%, reducing the PBO to $1.778 trillion at the end of the month. The overall asset value for these 100 pensions increased from $1.309 trillion to $1.324 trillion.
Looking forward, if these 100 pensions were to achieve their expected 7.8% median asset return and if the current discount rate of 4.08% were to be maintained throughout 2012 and 2013, these pensions would improve the pension funded ratio from 74.5% to 75.4% by the end of 2012 and to 79.9% by the end of 2013.
To view the complete study, go to http://ow.ly/4xFIt.