Market performance pushes DB pension plans further into positive territory

investmentnews.com:

Defined benefit pension plans headed further into the black last month with a $57 billion boost to their funded status.

The Milliman 100 Public Pension Funding Index posted a funded ratio of 76.8% in July, up from 75.8% a month earlier as positive market performance boosted pension plans’ investment returns by an estimated aggregate of 1.9% (with a range for individual plans of 0.1%-1.9%).

During July 2023, the deficit between the estimated assets and liabilities decreased from $1.467 trillion at the beginning of the month to $1.410 trillion at the end of the month.

The approximately $82 billion of market value gained by the plans was offset by net cash flow of around $10 billion and taking the total value of assets of the funds in the index to $4.7 trillion.

“The July 31 funded status is now the highest ratio we’ve seen since May 31, 2022, when it reached 78.4%,” said Becky Sielman, co-author of Milliman’s PPFI. “This improvement pushed two more plans over the 90% funded mark, for a total of 19, while the number of plans less than 60% funded remains stable at 23.”

Milliman has also published 2023 mid-year results of its Multiemployer Pension Funding Study which analyzes the funded status of all multiemployer defined benefit pension plans in the U.S.

At the half-way point of the year the funding shortfall for all multiemployer plans fell by about $65 billion, resulting in an aggregate funded percentage of 87%, up from 79% at the end of 2022.

Around 45 plans received special financial assistance totaling almost $50 billion and without that the aggregate funded percentage would have been 81%. The report says that those plans that received the funding were insolvent or about to be.

“The funded status of most plans will