The funded status of U.S. corporate defined benefit plans fell in February due to rising liabilities, said reports from Milliman, Aon Hewitt and BNY Mellon.
The funded status of the 100 largest U.S. corporate pension plans fell 170 basis points to 79.1% in February, the Milliman 100 Pension Funding index showed Tuesday.
Liabilities rose 1.75% to $1.74 trillion over the month, the result of a 13-basis-point drop in the discount rate to 4.06%. Asset values declined 0.36% to $1.376 trillion during the period, the result of a -0.02% investment return.
If the pension funds achieve a median 7.3% asset return and the discount rate remains at 4.06%, the funding ratio would increase to 80.7% by the of 2016 and 82.8% by the end of 2017, Milliman predicts.
“The pension funding deficit continues to move in the wrong direction,” said Zorast Wadia, principal, consulting actuary and co-author of the Milliman report, in a news release. “In January, poor asset performance drove declining funded status. In February, interest rates were the culprits. We’re off to a rough start in 2016.”
The funded status of the 100 largest U.S. corporate defined benefit plans is down 3.6 percentage points from 82.7% as of Dec. 31.
In another monthly report, BNY Mellon found the funded status of the typical U.S. corporate pension plan fell 130 basis points to 78.7% in February.
Liabilities rose 2.34% over the month, driven by a 14-basis-point drop in the discount rate to 4.18%. Assets were up 0.62% in February, according to BNY Mellon.
According to the Aon Hewitt Pension Risk Tracker, the aggregate funded status for defined benefit plans sponsored by S&P 500 companies fell 60 basis points to 77.4% in February.
Assets declined 0.06% to $1.58 trillion in February and liabilities rose 0.79% to $2.044 trillion, Aon Hewitt said. Investments returned 0.6% for the month. The liability increase was driven by a seven-basis-point drop in the discount rate to 4.16%.