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Pension Funding Index: 2019 ends with strong fourth quarter gains
By: Milliman | January 2020

Milliman 100 PFI funded ratio ends 2019 at 89.0% compared to 89.4% a year prior

PFI year-end discount rate settles at 3.20%, down 99 basis points, with double-digit investment gains of 15.66%

Forecast for end of year 2020 and 2021

Year in review
The year 2019 was characterized by strong investment returns alongside sharply decreasing discount rates that resulted in an overall $30 billion drop in funded status. Discount rates have declined in seven of the last 10 years. The Milliman 100 discount rates fell 99 basis points to 3.20% at the end of 2019 from 4.19% at the end of 2018. The discount rate at year-end 2019 was the lowest year-end discount rate and the fifth lowest monthly discount overall that has been recorded in the 19-year history of the Milliman 100 Pension Funding Index (PFI).

Assets outperformed expectations during 2019, posting an annual return of 15.66% following the disappointing 2018 investment loss of 2.94%. By comparison, the 2019 Milliman Pension Funding Study reported that the monthly median expected investment return during 2018 was 0.53% (6.6% annualized). The year 2019 was favorable for both fixed income and equity investment classes. The PFI has observed investment returns above expectations in six of the last 10 years.



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