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Pension Plan Funded Status Improves in July

The funded status of U.S. corporate pension plans improved in July, according to assessments by three financial services firms.


Milliman, Wilshire Consulting and Legal & General Investment Management America (LGIMA) all report that funded status overall inched up slightly from June to July. But that is a bit misleading, since even a small increase really spells an improvement of billions of dollars.

To wit: Milliman says that the funded status of the 100 largest corporate pension plans improved from 83.5% in June to 83.7% in July. But that 0.2% improvement translates to a $4 billion increase in one month. Wilshire showed similar results, according to Pensions & Investments, reporting that the aggregate funding ratio for S&P 500 companies’ pension plans improved by 1% in July to 84.3%. And LGIMA says that funded status improved to 83.9%, Pensions & Investments says.

Drilling down to greater specifics, all three also show similar results regarding asset values and liabilities.

   MIlliman   Wilshire    LGIMA
Change in Asset Values, June to July 2017   +0.93%  +1.3%  +1.9%
 Change in Liabilities, June to July 2017  +0.2%  +0.3%  +0.6%

Milliman and Wilshire also report that private employer pension plans’ funded status has improved over a longer term. Milliman says that funded percentages have improved overall since Jan. 1 by 0.2%, and by 6.7% from Aug. 1, 2016-July 31, 2017. For its part, Wilshire says that the aggregate funded ratio of the pension plans of the S&P 500 has improved by 2.4% since Jan. 1.

Zorast Wadia, co-author of the Milliman 100 PFI, in a press release attributed the slight movement in funded rates to relatively strong market returns and persistently low interest rates. He added that they are seeing a number of plans “make additional contributions with an eye towards shoring up funded status in the future.”