Pension Funding Index November 2014

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By John W. Ehrhardt, Zorast Wadia | 10 November 2014

The funded status of the 100 largest corporate defined benefit pension plans fell by $8 billion during October as measured by the Milliman 100 Pension Funding Index (PFI). The deficit widened to $263 billion from $255 billion at the end of September, primarily due to a decrease in the benchmark corporate bond interest rates used to value pension liabilities. As of October 31, the funded ratio declined to 84.8%, from 85.1% at the end of September.

Discount rate declines continue to be the lead story for 2014 as they have dropped by 68 basis points so far from year-end 2013. Year-to-date, the pension liabilities have increased by $141 billion, resulting in a decline in the Milliman 100 PFI funded ratio. The market value of assets improved by $14 billion as a result of October’s investment gain of 1.25%. The Milliman 100 PFI asset value increased to $1.468 trillion, up from $1.454 trillion at the end of September.