Increased benefit obligations resulted in a slight drop in funded status for the 100 largest American corporate pension plans, writes Poonkulali Thangavelu for Chief Investment Officer.
The funded status dipped to 81.2 per cent in 2016, down from 81.9 per cent the year before. The plans also saw a lot of volatility last year, reports Milliman.
“Investment performance exceeded expectations, with the 100 largest US pensions experiencing returns of 8.4 per cent … ,” Zorast Wadia, an actuary and co-author of the pension funding study is quoted saying.
“But the volatile interest rate environment saw the discount rate plummet by 30 basis points. In 2016, these dynamics resulted in a funded ratio that oscillated back and forth for most of the year before the post-election bump. The end result was a funded ratio of 81.2 per cent—not that far off from where we’ve been at the end of 2015 and 2014.”
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