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Corporate pension funding hovers around 81% in February — 2 reports

The largest U.S. corporate pension plans did not see a big change in their aggregate funded status in February, said reports from Milliman and Aon Hewitt.

The funded status of the 100 largest U.S. corporate pension plans fell 10 basis points to 81.5% in February as liability growth outpaced assets, the Milliman 100 Pension Funding index showed Tuesday.

Liabilities rose 1.46% to $1.741 trillion in February, the result of an 11-basis-point drop in the discount rate to 3.89%. Asset values increased 1.36% to $1.419 trillion, the result of a 1.74% investment return.

If the pension funds achieve a median 7.2% asset return and the discount rate remains at 3.89%, the funding ratio would increase to 83.1% by the of 2017 and 85.3% by the end of 2018, Milliman predicted.

According to the Aon Hewitt Pension Risk Tracker on Monday, the aggregate funded status for defined benefit plans sponsored by S&P 500 companies rose 30 basis points to 80.9% at the end of February.

Liabilities increased 1.29% over the month to $2.08 trillion, driven by the 11 basis-point-drop in the discount rate to 3.89%, and were outpaced by a 1.67% increase in assets to $1.68 trillion, which was driven by positive investment returns of 2%, Aon Hewitt said.