Pension Funding Index, October 2011

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By John W. Ehrhardt, Zorast Wadia | 06 October 2011

The funded status of the 100 largest corporate defined benefit pension plans dropped by $124 billion during September 2011 as measured by the Milliman 100 Pension Funding Index (PFI). This marks the largest drop in funded status during the 11 year history of the Million 100 PFI.

The funded status decline was due to the two-fold effect of investment losses coupled with a decrease in corporate bond interest rates that are the benchmarks used to value pension liabilities.

The funded ratio plummeted to 72.8% from 79.3% at the end of August 2011 and the funded status deficit increased from $315 billion to $439 billion.

The funded status has eroded by more than $252 billion since June 30th, the most significant three-month decline since the start of the financial crisis during the last quarter of 2008.

Read the latest Pension Funding Index »