Pension liabilities swelled by $133 billion in July, according to a new report.
Milliman Inc., Seattle, published this finding in its annual study of the 100 largest defined benefit pension plans sponsored by U.S. public companies. The Milliman 100 Pension Funding Index projects the funded status for pension plans included in the study, the plans reflecting the impact of market returns and interest rate changes on pension funded status. The study uses actual reported asset values, liabilities, and asset allocations of the companies’ pension plans.
The increase in pension fund liabilities, the study discloses, far exceeds a $13 billion investment gain. The increase has a resulted in a Milliman 100 PFI funded status deficit of $533 billion and a reduced funded ratio of 70.9%.
The report states the favorable investment gain was battered by a continued decline of interest rates on high-quality fixed income investments, which are the standard upon which pension liabilities are measured.
The funded status of the 100 largest corporate defined benefit pension plans dropped by $120 billion in July, as measured by the Milliman 100 Pension Funding Index (PFI). This was the largest funded status decrease ever recorded in the 12-year history of the Milliman 100 PFI.