The index saw unfunded liabilities fall to $132 billion from the $164 billion measured at the end of August. The deficit drop was due primarily to gains of more than 2% on pension plan assets during September, bringing the PFI funded ratio to 91.4% from the previously measured 89.3% after a fourth consecutive quarter of improvement.
Index researchers also predicted that, under an optimistic forecast with interest rates reaching 4.95% by the end of 2013, 5.55% by the end of 2014, and annual asset returns of 11.5%, the funded ratio would climb to 95% by the end of 2013. That figure could reach 113% by the end of 2014 under the same assumptions.
Under a pessimistic forecast with similar interest rates and returns of 3.5%, researchers found the funded ratio would decline to 90% by the end of 2013 and 84% by the end of 2014.
“It looks like the good news surrounding pension funded status has returned, at least temporarily, after a slight reversal of direction in August,” said John Ehrhardt, co-author of the Milliman Pension Funding Index.
A complete copy of the study can be found here.