Declining interest rates close out a rough quarter that registered a record growth in the U.S.’s pension funding deficit, according to Milliman Analysis.
In the latest results of its Pension Funding Index, comprising 100 of the U.S.’s largest DB plans, the global consulting and actuarial firm revealed these plans experienced a $31 billion investment loss and a $93 billion increase in pension liabilities in September.
Since June 30, the funded status deficit has grown by $252 billion, making the third quarter of calendar year 2011 the second worst in the history of this study. The only previous quarter in which pensions have performed so poorly was the fourth quarter of calendar year 2008, which spanned the financial crisis.
“September was a historically awful month for pensions, and we’re getting uncomfortably close to the worst funded ratio in the history of our study,” said John Ehrhardt, co-author of the Milliman Pension Funding Study. “The continued march of the liability-driven funding deficit continues, leaving corporate pensions with some important decisions as they look to plan for 2012.”
Year-to-date, the cumulative asset return on these 100 pensions has been -1.31% and the Milliman 100 PFI funded status has decreased by $211 billion, dropping the funded ratio from 84.1% to 72.8%.