Milliman Says Corporate Pensions Suffer Funding Drop in 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.