By Milliman

The funded status of the nation’s 100 largest corporate defined benefit pension plans decreased by $7 billion during April, as measured by the Milliman 100 Pension Funding Index (PFI). A decrease in the benchmark corporate bond interest rates used to value pension liabilities led to an increase in these liabilities of $10 billion for the month. As of April 30, the funded ratio fell to 99.5%, from 100.1% at the end of March. April saw the funding surplus from the beginning of the month change to a funding deficit of $7 billion by the end of the month.

The market value of assets improved by $2 billion because of April’s moderate 0.62% investment return. The Milliman 100 PFI asset value increased to $1.354 trillion as of April 30, 2023, from $1.352 trillion as of March 31, 2023. By comparison, the 2023 Milliman Pension Funding Study (PFS) reported that the monthly median expected investment return during 2022 was 0.47% (5.8% annualized). The full results of the annual 2023 study can be found at www.milliman.com/pfs.

The Milliman 100 PFI projected benefit obligation increased by $10 billion during April, to $1.361 trillion. The change resulted from a decrease of eight basis points (bps) in the monthly discount rate, from 5.00% in March to 4.92% for April.

Over the last 12 months (May 2022 – April 2023), the cumulative asset return for these pension plans has been a paltry 0.23%, and the Milliman 100 PFI funded status position has declined by $62 billion. The funded status drop is primarily due to poor asset returns. Discount rates experienced a net increase of 62 bps from 4.30% one year ago to 4.92%. The funded ratio of the Milliman 100 companies has dropped over the past 12 months, from 103.7% to 99.5%.

Read Report here