Milliman 100 Funding Status Improves to 82% in January

February 9, 2011 ( - Plans in the Milliman 100 Pension Index experienced asset increases of $6 billion and liability decreases of $35 billion, resulting in a $41 billion increase in pension funded status for the month, to 8.2% funded.

For the last 12 months, these pensions experienced a $15-billion improvement in funded status, which compares favorably to the performance over the course of calendar year 2010, when these pensions saw the funded status deficit increase by $49 billion, according to a press release.  

“[T]his is the first time we’ve been above 80% since last April. At the same time, the pension deficit has been yo-yoing between $200 billion and $450 billion for the last two years, and we are still susceptible to that kind of volatility,” said John Ehrhardt, co-author of the Milliman 100 Pension Funding Index, in the announcement.  

The study offers projections for 2011 and 2012, which help to illustrate the challenge posed by the pension funded status deficit. If interest rates continue along their current lines and these 100 pensions achieve their 8.1% median return, the deficit will shrink to $223 billion by the end of 2012. More optimistic performance—12.1% annual returns and eventual interest rates of 6.67%—would help these pensions reach 90% funded status by the end of September and would eliminate the deficit and put the funded ratio at 108% by the end of 2012.    

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