Milliman Says Corporate Pensions Suffer Funding Drop in November

In the latest update to the Milliman 100 Pension Funding Index, which consists of 100 of the nation's largest defined benefit pensions, the global consulting and actuarial firm showed these plans experienced a $22 billion decrease in pension funded status for the month of November.

(December 14, 2010) — The combined funding status of the 100 largest US corporate defined benefit pension plans has suffered a funding drop of $22 billion in November, Milliman’s latest research has revealed.

“We were going strong for a couple of months but that momentum faded in November, and it seems likely that these 100 pensions will end 2010 with a decline in funded status compared to where they were at the end of 2009,” said John Ehrhardt, co-author of the Milliman 100 Pension Funding Index, in a statement. “Companies are now turning their attention to 2011 and what it will take to improve funded status in what looks likely to be a big year for pension expense.”

According to a Milliman news release, the drop last month has reduced the funding ratio 1.3 percentage points to 77%, with the plans’ cumulative assets declining $8 billion for the month to $1.121 trillion. Meanwhile, liabilities increased by $14 billion to $1.456 trillion.

November’s decline in funded status follows two months of improvement. As of November 30, the combined pension funding deficit was $335 billion. The firm noted that this month’s study continues to offer projections for 2011 and 2012, illustrating how asset performance and discount rates may impact funded status.

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