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Pension Funding Index: 2017 ends with stellar investment gains modestly offsetting increasing pension liabilities
By: Milliman | January, 2018

2017 Milliman 100 PFI funded ratio settles at 84.1% with year’s lowest discount rate Forecast for end of year 2018 and 2019

Year in review
During 2017, corporate pensions experienced strong investment returns paired with decreasing discount rates. While the 2017 Milliman PFI funded ratio increased by eight basis points, there is only muted appreciation for this positive move because it was accompanied by a $2 billion deterioration in funded status. The Milliman 100 discount rate fell 46 basis points to 3.53% at the end of 2017 from 3.99% at the end of 2016. This marks the seventh time in the past 10 years the annual discount rate has declined. At 3.53%, the discount rate at year-end 2017 was the lowest year-end discount rate and fifth lowest monthly discount rate overall that has been recorded in the 17-year history of the Milliman 100 Pension Funding Index (PFI).

While asset returns during 2015 and 2016 were below expectations, assets outperformed expectations during 2017 with a gain of 11.47%. By comparison, the 2017 Milliman Pension Funding Study reported that the monthly median expected investment return during 2016 was 0.57% (7.0% annualized). The year 2017 was favorable for both fixed income and equity investment classes. The Milliman Pension Funding Study has observed investment returns above expectations in six of the last 10 years. . .

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http://www.milliman.com/Solutions/Products/Pension-Funding-Index/

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