Milliman: U.S. corporate pension funding climbs another 2 points in November

Plans on track to wipe out deficits by end of 2014

The funded status of 100 of the largest U.S. corporate pension plans increased another two percentage points to 93.9% in November, according to the latest Milliman 100 Pension Funding Index.

The last time the aggregate funded status surpassed the current level was in September 2008 at 99.4%, before it plunged to 93.8% the following month. The pension deficit also decreased in November to $93 billion, the first time it dropped below $100 billion since October 2008.

“If we stay where we are in our projections, by the end of 2014 the deficit will be completely wiped out,” said Zorast Wadia, principal, consulting actuary, in a telephone interview. “There have been huge gains in the last 12 months. … The deficit has decreased by $393 billion.”

For the month, assets increased $11 billion to $1.44 trillion, while liabilities decreased $23 billion to $1.533 trillion. The discount rate was up 11 basis points in November to 4.78%.

“The main thing is the discount rates have been cooperative,” Mr. Wadia said. “They've slowly inched up and, compared to last year, are up about 75 basis points.”

If the pension funds achieve the expected 7.5% return in 2014 and the discount rate remains at 4.78%, the aggregate funded status will be 100% at the end of next year. This year is on pace to exceed the 7.5% expected return for the fourth time in the last five years.

“Certainly, some plans have reached the fully funded mark already,” Mr. Wadia said.