The funded status of the 100 largest U.S. corporate pension plans increased in June because of slightly rising interest rates, said the latest Milliman 100 Pension Funding index.
The funding ratio increased to 85.3%, up from 84.5% at the end of May.
The discount rate was 4.08%, up from 4.06% the previous month. Meanwhile, assets rose to $1.459 trillion, up 0.8% from May.
If the pension funds achieve a median 7.4% return and the discount rate remains at the current 4.08%, the funded status would increase to 86.7% by the year's end, still a 1.6 percentage point drop from 88.3% at the end of December.
“If you want to understand why pension funded status is down this year, consider the fact that June was the first month in 2014 with rising interest rates and it's not like we saw a massive swing,” John Ehrhardt, principal, consulting actuary and co-author of the report, said in a news release. “Interest rates continue to be the story with these pensions.”