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Pension Funding Index: Funded status dips by $2 billion in May
By: Milliman | June, 2018

The Milliman 100 PFI funded ratio remains static at 91.6%; discount rates drop but investment performance is just enough to keep the funded ratio unchanged

The funded status of the 100 largest corporate defined benefit pension plans worsened by $2 billion during May as measured by the Milliman 100 Pension Funding Index (PFI). The deficit rose to $141 billion from $139 billion at the end of April due to a decrease in the benchmark corporate bond interest rates used to value pension liabilities. Investment gains during May partially offset the liability increases and limited the funded status decline. As of May 31, the funded ratio was unchanged from 91.6% seen at the end of April.

May’s 0.73% investment gain increased Milliman 100 PFI asset values by $7 billion to $1.531 trillion at the end of May. By comparison, the 2018 Milliman Pension Funding Study reported that the monthly median expected investment return during 2017 was 0.55% (6.8% annualized).

The Milliman 100 PFI projected benefit obligation (PBO) increased by $9 billion during May to $1.672 trillion. The change resulted from a decrease of four basis points in the monthly discount rate to 3.99% for May, from 4.03% in April.

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