October Sees Second Monthly Pension Increase

November 12, 2010 (PLANSPONSOR.com) – NewMilliman data shows the 100 large plans in the Milliman 100 Pension Funding Index experienced asset increases of $15 billion and liability decreases of $64 billion in October.

A Milliman news release said that resulted in a $79-billion increase in pension funded status for the month, the second consecutive month of pension gains following a 10-year low in August.

“In the last two months alone, we’ve seen a $146-billion improvement in pension funded status, driven both by positive asset returns, as well as by a combined 49 basis point increase in the relevant interest rates,” said John Ehrhardt, co-author of the Milliman 100 Pension Funding Index, in the news release. “This has been one of the more impressive two-month improvements that we have seen, though as our projections show, we still have a long climb in front of us.”

According to Milliman, if these pensions could muster a 12.1% annual asset return and if the ultimate discount rate climbed to 6.57%, pensions would reach full funded status in the summer of 2012. Alternatively, the study offers a pessimistic scenario where pension funded status could decline even further, to 65% by the end of 2012.

More information is at http://www.milliman.com/expertise/employee-benefits/products-tools/pension-funding-index/.