The funded status of the 100 largest U.S. corporate pension plans rose 1 percentage point to 91.6% in April, the Milliman 100 Pension Funding index showed Friday.
Milliman attributed this to an increase in the corporate bond rates used to measure pension liabilities.
Assets dropped 0.4% over the month to $1.523 trillion due in part to a 0.11% investment loss. Liability values, meanwhile, dropped 1.5% to $1.663 trillion for the month as the discount rate rose 12 basis points to 4.03%.
"Corporate pensions continue to get some discount rate relief in 2018, despite volatile equity markets," said Zorast Wadia, principal, consulting actuary and co-author of the corporate pension funding report, in a news release about the results. "Over the past 12 months, with the rise in rates and a 6.17% cumulative asset gain for these plans, we've seen the funded ratio climb from 85.5% to 91.6%."
Looking forward, if interest rates reach 4.43% by the end of 2018 and 5.03% by the end of 2019, and pension funds achieve a median 11% asset return, the funding ratio would climb to 101% by the end of 2018 and 117% by the end of 2019, Milliman predicted. But if the discount rate reaches 3.63% at the end of 2018 and 3.03% by the end of 2019 and annual returns average 3%, then the funding ratio would decline to 87% by the end of 2018 and 81% by the end of 2019.
