The Milliman 100 Pension Funding Index (PFI), which tracks the 100 largest U.
S. corporate pension plans, reported a net funded status improvement of $16 billion during the third quarter, reaching a funded ratio of 106.5% as of September 30. This marks the highest level for the PFI since late 2007.
During September, plan assets generated returns of 2.50%, which helped to counteract a 17-basis-point decrease in discount rates. These factors combined to lift the PFI funded ratio from 106.3% at the end of August to 106.5% by the end of September. The gains contributed $26 billion to the market value of plan assets, expanding the funded status surplus to $80 billion. Concurrently, discount rates continued their decline, reaching 5.36% in September, which increased plan liabilities by $22 billion.
Zorast Wadia, author of the Milliman PFI, noted that “Robust returns helped corporate pension funding levels improve for the sixth straight month in September.” He added, “The last time ratios were higher was in October 2007, when they reached 108.1%, right before the financial crisis. With more declines in discount rates likely ahead, funded ratios may lose ground unless plan assets move in lockstep with liabilities.”
Looking forward, an optimistic forecast projects rising interest rates to 5.51% by the end of 2025 and 6.11% by the end of 2026, combined with annual asset gains of 10.53%. Under this scenario, the funded ratio could climb to 110% by the end of 2025 and 124% by the end of 2026. Conversely, a pessimistic forecast, with discount rates falling to 5.21% by the end of 2025 and 4.61% by the end of 2026, alongside 2.53% annual asset returns, predicts a decline in the funded ratio to 104% by the end of 2025 and 95% by the end of 2026.
Milliman, Inc. is a global consulting and actuarial firm established in 1947. The independent firm provides solutions across various sectors, including insurance, financial services, healthcare, life sciences, and employee benefits, operating from offices worldwide.
