Milliman sees an increase in funding of pensions

The funded status of U.S. pensions in January improved by $106 billion in January, according to a new report.

Global consulting and actuarial firm Milliman Inc. Seattle, published this finding in a summary of results from the company’s Pension Funding Index, which consists of 100 of the nation’s largest corporate defined benefit pension plans.

The January rise in the funded status results from an $83 billion decrease in the pension benefit obligation (PBO) and a $23 billion increase in assets. The $106 billion advancement reverses a $74 billion deficit increase over the course of 2012 and “sets off these 100 plans on a strong start in 2013,” the report states.

“In January we saw one of the more cooperative interest rate environments in recent memory,” says John Ehrhardt, co-author of the Milliman Pension Funding Study. “Over the course of 2012, plunging interest rates drove a ballooning pension funded status deficit. Now these rates have helped deflate that deficit. It’s early, but $106 billion in improvement is welcome news.”