Milliman analysis: Corporate pension funded ratio rises to 103.4% in April despite investment losses
May 13 2024 - 12:30PM
Business Wire
Milliman PFI plans mark four straight months
of funding status improvements
Milliman, Inc., a premier global consulting and actuarial firm,
today released the results of its latest Milliman 100 Pension
Funding Index (PFI), which analyzes the 100 largest U.S. corporate
pension plans.
During April, the Milliman 100 PFI funded ratio improved from
102.2% at the end of March to 103.4% as of April 30. Rising
discount rates again drove this result, as they increased 44 basis
points, from 5.24% in March to 5.68% in April and reduced plan
liabilities by $60 billion. This offset April’s investment returns
of -3.00%, which reduced the market value of PFI plan assets by $46
billion.
“April’s investment performance was the worst of the year so
far, and we would not typically expect to see a funding improvement
in a month with 3% losses,” said Zorast Wadia, author of the PFI.
“But with discount rates soaring 44 basis points for the period,
the liability reduction far outweighed the drop in assets,
resulting in further progress for the plans toward a funding
surplus and enhancing the risk-management options available to plan
sponsors.”
Looking ahead, under an optimistic forecast with rising interest
rates (reaching 6.08% by the end of 2024 and 6.68% by the end of
2025) and annual asset returns of 10.4%, the funded ratio would
climb to 111% by the end of 2024 and 124% by the end of 2025. Under
a pessimistic forecast with similar interest rate and asset
movements (5.28% discount rate at the end of 2024 and 4.68% by the
end of 2025 and 2.4% annual returns), the funded ratio is projected
to decline to 97% by the end of 2024 and 88% by the end of
2025.
To view the complete Pension Funding Index, go to
www.milliman.com/pfi. To see Milliman’s full range of annual
Pension Funding Studies, go to
https://www.milliman.com/en/retirement-and-benefits/pension-funding-studies.
To receive regular updates of Milliman’s pension funding analysis,
contact us at pensionfunding@milliman.com.
About Milliman
Milliman is among the world's largest providers of actuarial and
related products and services. The firm has consulting practices in
healthcare, property & casualty insurance, life insurance and
financial services, and employee benefits. Founded in 1947,
Milliman is an independent firm with offices in major cities around
the globe. For further information, visit milliman.com.
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Zorast Wadia Milliman, Inc. Tel: +1 646 473 3315
zorast.wadia@milliman.com