The Index, consisting of 100 of the nation's largest defined benefit (DB) pension plans, showed a $30 billion reduction in the pension benefit obligation (PBO) and a $15 billion asset improvement. The $45 billion increase in funded status means these pensions have reduced their cumulative funding deficit by $80 billion in the last two months, following a four-month slide of $304 billion.
In September, the discount rate used to calculate pension liabilities increased from 3.99% to 4.08%, reducing the PBO to $1.778 trillion at the end of the month. The overall asset value for these 100 pensions increased from $1.309 trillion to $1.324 trillion.
Looking forward, if these 100 pensions were to achieve their expected 7.8% median asset return and if the current discount rate of 4.08% were to be maintained throughout 2012 and 2013, these pensions would improve the pension funded ratio from 74.5% to 75.4% by the end of 2012 and to 79.9% by the end of 2013. To view the complete study, go to http://ow.ly/4xFIt.