Milliman analysis: 2016 begins with dismal market performance, lowering pension funded status from 82.7% to 80.9%

Pension funding deficit grows by $31 billion in January

Feb 08, 2016, 17:00 ET from Milliman, Inc.

SEATTLE, Feb. 8, 2016 /PRNewswire/ -- Milliman, Inc., a premier global consulting and actuarial firm, today released the results of its latest Pension Funding Index, which analyzes the 100 largest U.S. corporate pension plans. In January, these pension plans experienced a $31 billion decrease in funded status largely due to a $25 billion decrease in asset values. The funded status for these pensions decreased from 82.7% to 80.9%.

"A 1.46% decline in asset values was the last thing these pensions needed after flat performance in 2015," said Zorast Wadia, co-author of the Milliman 100 Pension Funding Index. "About the only good news is that the market declines and expanding liabilities weren't enough to drop these pensions below 80% as was the case a year ago on January 31."

Looking forward, under an optimistic forecast with rising interest rates (reaching 4.74% by the end of 2016 and 5.34% by the end of 2017) and asset gains (11.3% annual returns), the funded ratio would climb to 92% by the end of 2016 and 105% by the end of 2017.  Under a pessimistic forecast (3.64% discount rate at the end of 2016 and 3.04% by the end of 2017 and 3.3% annual returns), the funded ratio would decline to 74% by the end of 2016 and 68% by the end of 2017.

To view the complete Pension Funding Index, go to http://us.milliman.com/PFI. To see the 2015 Milliman Pension Funding Study, go to http://us.milliman.com/PFS/. 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.

About the Milliman Pension Funding Study
For the past 15 years, Milliman has conducted an annual study of the 100 largest defined benefit pension plans sponsored by U.S. public companies. The results of the Milliman 2015 Pension Funding Study are based on the pension plan accounting information disclosed in the footnotes to the companies' annual reports for the 2014 fiscal year and for previous fiscal years. These figures represent the GAAP accounting information that public companies are required to report under Financial Accounting Standards Board Accounting Standards Codification Subtopics 715-20, 715-30, and 715-60. In addition to providing the financial information on the funded status of their U.S. qualified pension plans, the footnotes may also include figures for the companies' nonqualified and foreign plans, both of which are often unfunded or subject to different funding standards from those for U.S. qualified pension plans. The information, data, and footnotes do not represent the funded status of the companies' U.S. qualified pension plans under ERISA.

SOURCE Milliman, Inc.



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