The combined funded status of the 100 largest U.S. corporate defined benefit pension plans studied by Milliman declined slightly in April, to 87.2% from 87.8%.
For the year ended April 30, funded status improved more than four percentage points from 82.7%
Cumulative plan assets were $1.252 trillion in April, up 1.5% from the end of March, while pension liabilities increased to $1.436 trillion, a 2.2% increase, because of a decrease of 16 basis points in the monthly discount rate to 5.37%.
April’s funding deficit among the 100 pension funds increased to $184 billion, up 7% from the end of March. A $31 billion liability increase that resulted from a reduction in the discount rate offset investment gains on plan assets of $19 billion during the month.
For the year, the cumulative asset return among the 100 plans has 10.5%, with funded status increasing by $50 billion.
Milliman also predicted that the funded status of the 100 plans would rise to 90% by the end of 2011 and 98.8% at the end of 2013, based on an 8% median asset return for plan portfolios and the current discount rate of 5.37%. The forecast assumes that 2011-2013 aggregate contributions to remain level with 2010 contribution amounts, which were a record $60 billion.
The full report is at www.milliman.com/expertise/employee-benefits/products-tools/pension-funding-index.
John Ehrhardt, co-author of the Milliman 100 Pension Funding index, could not be reached for comment by press time.