Dear Actuary: The strong market has boosted my plan's funded status - what now?

With the recent strong stock market performance, many plan sponsors will likely expect increases in their plans’ funded ratios and reductions in the actuarially determined contribution. This report, titled “Dear Actuary,” responds to a question by a hypothetical plan sponsor on how they should take this opportunity to shore up the actuarial assumptions being used to value plan liabilities, especially the investment return assumption. We also make other suggestions for modifying the approach to better prepare for a different market.