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Pension Funding Index: Funded status improves by $21 billion in September
By: Milliman | October, 2018

The Milliman 100 PFI funded ratio increases to 94.5%, the highest since September 2008

The funded status of the 100 largest corporate defined benefit pension plans rose by $21 billion during September as measured by the Milliman 100 Pension Funding Index (PFI). The deficit fell to $90 billion—the first time since October 2008 that the PFI deficit is less than $100 billion—primarily due to an increase in the benchmark corporate bond interest rates used to value pension liabilities. The funded status improvement was partially offset by investment losses in September. As of September 30, the funded ratio increased to 94.5%, up from 93.3% at the end of August. The last time we experienced a funding ratio this high dates back 10 years, to September 30, 2008, when the funded ratio was 99.4%. At that time, just prior to the global financial crisis, plans were nearly fully funded.

The market value of assets dropped by $6 billion as a result of September’s 0.14% investment loss. The Milliman 100 PFI asset value decreased to $1.540 trillion from $1.546 trillion at the end of August. By comparison, the 2018 Milliman Pension Funding Study reported that the monthly median expected investment return during 2017 was 0.55% (6.8% annualized).

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