Many large U.S. pension plans are reporting strong investment performance.

Researchers in the New York office of Milliman have published that comforting conclusion in a review of 2005 investment returns at 100 large U.S. defined benefit pension plans.

Although some plan sponsors are facing severe crises and many plans foundered in the early 2000s, actual plan returns have beaten projections for 3 straight years, the Milliman researchers report.

The official discount rate used in pension liability forecasts fell for the fifth straight year, to 5.5%, and the expected average return was just 8.5%. In the real world, the average return on assets at large plans increased to 11.3% in 2005, and the 3-year average return on assets has been 14.3%, the researchers report.

The total pension funding deficit for the top 100 plans fell to $96 billion at the end of 2005, from $111 billion a year earlier.

The plans had about 99% of the assets they appear to need to meet funding requirements for accumulated benefits obligations, the researchers report.