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Funded Status of Large DB Plans Up

Practice Management

Punxsutawney Phil may have predicted six more weeks of cold at the outset of February, but he was dead wrong regarding the fortunes of the 100 largest private-sector pension plans, according to a recent report. They had a good month, much like the hypothetical plans monitored regularly in two other ongoing studies.  

According to Milliman, the 100 largest corporate defined benefit plans improved so much in February that their funded ratio improved by more than three percentage points, marking the fifth consecutive month it has improved. 

More specifically: 

Measure January February Change from the Previous Month
Funded Ratio 89.7% 92.9% + 3.2 percentage points
Funded Liability $200 billion $133 billion -$67 billion

 

Milliman attributes the improvement in the funded status to the improvement in funded liability. And it says that the increase in benchmark corporate bond interest rates used to value pension liabilities resulted in that shrinking liability deficit. And Milliman says that that the pension liabilities fell to $1.866 trillion by the end of February. 

There was a bit of chill on the market value of assets, Milliman says, which fell $2 billion in February due to investment gains of only 0.13%.