The combined funded status of the largest 100 U.S. corporate defined benefit pension plans studied by Milliman increased $44 billion in December, increasing the funding ratio 2.8 percentage points to end the year at 79.8%.
Cumulative assets of the 100 plans increased $24 billion to $1.145 trillion, while liabilities decreased $20 billion to $1.436 trillion, according to a Milliman report.
The combined pension funding deficit as of Dec. 31 was $291 billion.
For 2010, historically low interest rates drove funded status down by $49 billion, according to the report. Assets were up by $50 billion for the year, but liabilities rose $99 billion.
The cumulative asset return for the year was 10.4%, while pension liabilities rose 12%.
John Ehrhardt, Milliman principal, consulting actuary and co-author of the Milliman 100 Pension Funding Index, said in a telephone interview that the strong fourth quarter of high returns and declining liabilities helped pension plans recover $170 billion in equity lost during the historic lows experienced during the summer.
“It's a good recovery from the bottom, and we hope that is the bottom,” he said.
Despite the increase, Mr. Ehrhardt noted that even under an optimistic scenario of rising interest rates reaching 6.52% by the end of 2012 and annualized investment returns of 12.1%, it would take 18 months from now to reach full funding.