Funding Status of Largest Plans Falls in August

The funded ratios of the largest pension plans in the country collectively fell during the month of August, according to a Milliman report. Reported by Pensions & Investments:

The funded status of the 100 largest U.S. corporate pension plans fell to 84% in August, down from 84.8% in July, said the latest Milliman 100 Pension Funding index.

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During the same period, investments returned 1.92%, the second best monthly return of the year, Mr. Wadia said, surpassed only by February’s 2.3% return. Assets rose to $1.47 trillion in August from $1.45 trillion in July.

If the pension funds achieve a median 7.4% annual return and the discount rate remains at the current 3.89%, the funded status would increase to 84.9% by the year’s end, still a 3.4-percentage point drop from 88.3% in December 2013, according to Milliman.

“The reason (the funded status) hasn’t fallen more (year-to-date) is because of positive asset growth,” Mr. Wadia said. Assets have returned 7.5% year to date Aug. 31.

The largest corporate defined-benefit plans, on the other hand, improved in August, as funded status improved from 88.3 percent to 88.4 percent.