How do you lose more than $400 billion and still end up better off than you were before?
America’s top corporate pension funds have broken into surplus this year for the first time since 2007, just before the global financial crisis, despite disastrous 2022 investment losses on the stock and bond markets.
We’re talking huge numbers, too. The top 100 funds have seen the accounting value of their liabilities plunge by a third since the end of 2020 according to analyst group Milliman.That’s far more than pensions have lost on stocks and bonds over the same period. With rates still high this year, while stocks have rebounded, the top 100 funds ended July in the black with $1.04 in assets for every $1 in future liabilities, according to Milliman’s numbers. Insurance giant Aon puts the figure at $1.02.
“Over the last 12 months , the cumulative asset return for these plans has been 1.6%, and yet the Milliman 100 PFI funded status deficit has improved by $43 billion,” Milliman reports. “This funded status gain is primarily the result of significant increases in discount rates over the past 12-month period. Discount rates increased by 100 bps to 5.25% from 4.25% one year ago.”
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