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Laxman Pai, Opalesque Asia: The funding ratio among corporate plans dropped to 84% as of May 31 from 84.5% as of April 30, said a report from Milliman.
Discount rates dropped to 2.76% in May, offsetting the month's investment gains of 1.85%, the report said.
In May, Milliman's Pension Funding Index (PFI) funding deficit grew to $306 billion as discount rates dropped to 2.76%, nearing all-time index lows and offsetting positive investment gains for the month.
Asset values for the PFI plans increased by $24 billion to $1.605 trillion during May, while the PFI projected benefit obligation (PBO) increased by $41 billion during May to $1.911 trillion, the result of a 16 basis-point drop.
"With discount rates moored below 3% for the second month in a row, corporate pensions have been unable to regain any ground - despite the positive stock market returns," said Zorast Wadia, author of the Milliman 100 PFI.
Looking forward, under an optimistic forecast with rising interest rates (reaching 3.11% by the end of 2020 and 3.71% by the end of 2021) and asset gains (10.5% annual returns), the funded ratio would climb to 92% by the end of 2020 and 108% by the end of 2021.
Under a pessimistic forecast (2.41% discount rate by the end of 2020 and 1.81% by the end of 2021 and 2.5% annual returns), the funded ratio would decline to 80% by the end of 2020 and 73% by the end of 2021.
The global consulting and actuarial firm Milliman, in its PFI, analyzes...................... To view our full article Click here
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