The funded ratio of the 100 largest corporate defined benefit pension plans in the U.S. dipped from 104 per cent at the end of October to 103 per cent as of Nov. 30, according to Milliman Inc.’s latest public pension funding index.
It found as rates fell from 6.2 per cent in October to 5.55 per cent in November — the largest monthly decline since 2008 — plan liabilities rose by US$82 billion.
Read: Funded ratio of large U.S. DB pension plans down in August with $98BN funded status decline: report
A significant monthly investment gain of 6.53 per cent, the largest of 2023, helped to partially offset liability losses. The market value of plan assets rose by $74 billion to $1.3 trillion. The net result was a $8 billion decrease in plans’ funded status, with the surplus declining to $41 billion.
“November saw both the largest monthly investment return and the largest discount rate drop of the year,” said Zorast Wadia, the report’s author, in a press release. “Although these mostly offset each other, the discount rate change was slightly more dominant, resulting in the funded ratio decline. All eyes will be on where interest rates and plan asset values end up in December, as this will lay the foundation for 2024 pension calculations for calendar-year plans.”
Read: U.S. public DB pension plans’ funded ratio continues to increase: report