Corporate Pension Funding Decreases in August

September 11, 2013 ( – The funded status of the 100 largest corporate defined benefit (DB) pension plans decreased by $6 billion in August, according to the Milliman 100 Pension Funding Index (PFI).

The deficit rose to $162 billion, primarily due to adverse performance in the financial markets last month. The PFI funded ratio decreased to 89.4% from 89.9% at the end of July.

The projected benefit obligation, or pension liabilities, decreased by $8 billion to $1.532 trillion from $1.540 trillion at the end of July. According the PFI, this change was based on a 4-basis-point increase in the monthly discount rate to 4.77% for August, from 4.73% for July.

The market value of assets decreased by $14 billion as a result of August’s investment loss of -0.91%. The Milliman 100 PFI asset value decreased to $1.371 trillion, down from $1.385 trillion at the end of July.

The PFI also found that over the last 12 months, starting with September 2012, the cumulative asset return for these pensions has been 6.36% and the Milliman 100 PFI funded status deficit has improved by $351 billion, primarily due to rising interest rates. The discount rate as August 31, 2012, was 3.99% and ranked among the lowest ever recorded in the 13-year history of the PFI. The funded ratio of the Milliman 100 companies has improved over the past 12 months to 89.4% from 72%.