Pension Funding Index, September 2014

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By John W. Ehrhardt, Zorast Wadia | 08 September 2014
The funded status of the 100 largest corporate defined benefit pension plans measured by the Milliman 100 Pension Funding Index deteriorated by $22 billion in August. The deficit increased to $281 billion from $259 billion at the end of July, due to a drop in the benchmark corporate bond interest rates used to value pension liabilities. Despite a robust investment gain during the month, the funded ratio dropped to 84.0%, down from 84.8% at the end of July. The projected benefit obligation (PBO), or pension liabilities, increased by $46 billion during August, raising the Milliman 100 PFI value to $1.754 trillion from $1.708 trillion at the end of July. The PBO change resulted from a decrease of 21 basis points in the monthly discount rate to 3.89% for August, from 4.10% for July. The August 31 discount rate of 3.89% is the lowest ever recorded in the 14-year history of the Milliman 100 PFI.