Pension Funding Index January 2019

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By Charles J. Clark, Zorast Wadia | 11 January 2019

Investment losses alongside increasing discount rates characterized corporate pension experience in 2018, a combination that resulted in an overall $56 billion improvement in funded status. The Milliman 100 Pension Funding Index (PFI) discount rate rose 66 basis points to 4.19% at the end of 2018 from 3.53% at the end of 2017. The assets of the Milliman 100 plans under-performed expectations during 2018, posting a loss of 2.77%. The year-end 2018 funded ratio improved to 89.9% from 87.6% at the end of 2017 due to greater liability decreases compared to asset losses.

The funded status decline of $68 billion during December was the largest decline for the year. The deficit ballooned to $165 billion from a deficit of $97 billion at the end of November. As of December 31, the funded ratio fell to 89.9% from 93.9% at the end of November, recording the largest percentage decline for the year. December’s $26 billion decrease in market value brings the Milliman 100 PFI asset value to $1.462 trillion at year-end 2018. The Milliman 100 PFI liability value increased to $1.626 trillion at the end of December.