DB Plans See $58M Improvement in March

The 100 largest defined benefit (DB) pension plans experienced a $58 million improvement in funding in March. 

According to Milliman, Inc.’s Pension Funding Index, the funding improvement was due to the $4 billion improvement in asset value and a $54 billion reduction in the pension benefit obligation (PBO).

“For the first time in months, interest rates moved in a positive direction for these 100 corporate pensions,” said John Ehrhardt, co-author of the Milliman Pension Funding Study. “While the positive market performance was consistent with the first two months of 2012, the pairing of asset improvement and a significant reduction in liabilities makes March the first good news/good news month we’ve seen this year.” 

In March, the PBO for these pensions reached $1.526 trillion, as interest rates rose from 4.69% to 4.88%. The overall asset value for these 100 pensions grew from $1.295 trillion to $1.299 trillion.

If these 100 pensions achieve their expected 7.8% median asset return and if the current discount rate of 4.88% is maintained throughout 2012 and 2013, these pensions would narrow the pension funding gap from 85.1% to 88.3% by the end of 2012 and to 93.5% by the end of 2013.

To view the complete study, visit http://ow.ly/4xFIt