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Pension Funding Index June 2021
By Zorast Wadia and Charles J. Clark
The Milliman 100 PFI funded ratio increases to 98.8% as investment gains counter the effects of discount rate decreases
The funded status of the 100 largest corporate defined benefit pension plans increased by $8 billion during May as measured by the Milliman 100 Pension Funding Index (PFI). As of May 31, the deficit improved to $21 billion from $29 billion at the end of April due to strong investment performance. The funded status improvement was partially offset by liability increases due to a decrease in the benchmark corporate bond interest rates used to value pension liabilities. The funded ratio inched upward 0.4% in May, to 98.8%, from 98.4% at the end of April. This is the eighth consecutive month in which the funded ratio has improved.
May’s strong 1.24% investment gain increased Milliman 100 PFI asset values to $1.808 trillion from $1.792 trillion at the end of April. By comparison, the 2021 Milliman Pension Funding Study (PFS) reported that the monthly median expected investment return during 2020 was 0.50% (6.2% annualized).
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