The overall funding ratio at the 100 largest U.S. corporate pension plans edged up to 104.2% as of Oct. 31 – a new high for the year, according to the latest Milliman 100 Pension Funding Index released on Nov. 6.
The funding ratio was 103.6% at the end of September.
An investment return of -2.68% in October, the third consecutive month of losses, was offset by a significant increase in discount rates to 6.2% from 5.84%, which contributed to the gain.
Assets in the index declined by $40 billion in market value, to $1.229 trillion, while the funded status surplus increased to $50 billion.
"October marked a new funding ratio high for the year," said Zorast Wadia, author of the PFI, in a news release. "While plan assets fell for the third consecutive month, discount rates rose yet again, this time breaching the 6% threshold."
Wadia noted that discount rates have jumped by 100 basis points over the past four months and haven't reached such a level since May 2009, "making this a very favorable economic environment for plan sponsors."