US - US corporate pension liabilities fell by $29bn in September, resulting in a $67bn increase in the funded status of the top 100 schemes, research by Milliman reveals.
The Milliman 100 Pension Funding Index, which reports on the nation's 100 largest defined benefit schemes, found pension funds saw assets increase by $38bn. The improvements followed a particularly poor performance in August, which constituted the worst reported pension funded status in the 10 year history of the study.
Overall, the pension funding deficit decreased to $393bn at the end of September, said Milliman. If, for the remainder of the year, the companies in the study were to achieve their expected 8.1% median asset return and if the current discount rate of 4.93% were maintained for the rest of 2010, the funding status of the surveyed plans would increase to $390bn by the end of the year, the company said.
"In September the volatility went our way, which was good to see after last month's all-time low," said John Ehrhardt, co-author of the index. "This month was a positive step toward full funding, but we have a long climb ahead of us.
"Just to put this in perspective, it would take 17 consecutive, similarly positive months to get back to 100% funding. We all know that won't happen in these volatile times, but a positive step is a positive step."
A buyout tool which provides schemes with up-to-date pricing and comparisons between insurers has been launched by JLT Employee Benefits.
The DB white paper sets out plans to review the funding regime, with 'prudent' and 'appropriate' possibly redefined. But James Phillips asks if this could this signal a return to an MFR-like approach?
The trustees of GKN's pension schemes have agreed a package of mitigation measures that would improve funding to a "more prudent level" if Melrose's offer is accepted by shareholders next week.
While the new powers are welcome, most respondents doubt it will make a difference to the outcomes for members, Pensions Buzz respondents say.