Funded status of 100 largest U.S. corporate pension plans fell in April to 81.2% from 82.8% at the end of March, according to the latest Milliman 100 Pension Funding Index.
The pension deficit increased $37 billion to $321 billion. Investments returned 1.78% in April, the strongest month this year, increasing the total asset value by $23 billion. However, the discount rate dropped 24 basis points to 3.98%, just slightly above the record low of 3.92% set in July, resulting in a $60 billion increase in liabilities.
“It's getting boring to say, but it's all about interest rates,” said John Ehrhardt, principal and consulting actuary at Milliman and co-author of the report, in a telephone interview. “Interest rates were behaving the first three months, which allowed the first-quarter performance to be one of the best ever for pension funding.”
The aggregate funded status is up from 77.2% at the end of 2012, but has actually decreased from 82.6% in the last 12 months.
Mr. Ehrhardt said if interest rates stay where they are or increase and equity markets continue to rally, it should be a good year for funding ratios.
Total assets were $1.39 trillion at the end of April, compared with $1.711 trillion in liabilities.