Despite a disappointing 2015 investment return of only 0.9%, the year-end 2015
funded ratio managed to increase slightly to 81.8% from 81.7% a year ago due to a
25 basis point increase in discount rates and an update to life expectancy assumptions
Thirty-seven of Milliman 100 plan sponsors disclose adoption of spot rate accounting method
for fiscal year 2016 pension expense
In a tumultuous year that buffeted pension plans with volatile markets and interest rate movement,
the 100 largest corporate defined benefit (DB) pension plans made little progress in 2015.
The year for DB plans was much like being
a passenger on a fishing boat caught in a
squall. Heart stopping thunder and lightning
swirled and waves crashed. But when it all
blew by, DB plans’ funded ratios were in
roughly the same place as they’d been before
the storm, with a slight improvement as the
pension funding deficit declined by $19 billion,
settling at $307 billion at the end of 2015.
|FIGURE 1: HIGHLIGHTS (FIGURES IN $ BILLION)
||FISCAL YEAR ENDING
|MARKET VALUE OF ASSETS
|PROJECTED BENEFIT OBLIGATION
|NET PENSION INCOME/(COST)
|ACTUAL RATE OF RETURN
|Note: Numbers may not add up precisely due to rounding
Somewhat of a surprise is the disclosure that
37 of the largest 100 plan sponsor companies
will record fiscal year 2016 pension expense
using an accounting calculation method
change linked to the spot interest rates derived
from yield curves of high quality corporate
bonds. Changing to the spot rate method for
determining the interest cost of pension expense will result in pension
expense savings in 2016 for these 37 plan sponsors.
The December 31, 2015, funded ratio of the plans, as measured from
a review of public Securities and Exchange Commission (SEC) filings,
was 81.8%, almost indistinguishable from the December 31, 2014,
funded ratio of 81.7%.
With all of the controversy around the Federal Reserve’s interest
rate action–or perhaps not enough action–the 2015 discount rate
settled at 4.25%, up 25 basis points from the 2014 discount rate of
4.00%. Admittedly, DB plan obligations are only modestly affected
by the Fed’s action on short-term rates as long-term rates are used to
measure long duration pension obligations.
Pension obligations (as measured by the projected benefit obligation
or PBO) at the end of 2015 were further reduced for corrections to life
expectancy (or more pessimistically – higher mortality) assumptions.
While we are unable to collect specific detail regarding the reduction
in PBO for this revision, a 1% to 2% decrease is the anecdotal
evidence recited by employers and actuaries. Additional changes in life
expectancy assumptions may be published in the fourth quarter of 2016.
The two most adverse effects on the funded ratio were the result
of 2015 capital market experience and lower-than-expected
1. The actual return on the pension trusts was an anemic 0.9%
when the expectation was 7.2%, which created a shortfall in the
reduction of the deficit of almost $86 billion.
2. Employers reduced 2015 cash contributions by almost $9 billion
compared to 2014. Approximately $31 billion was contributed in
2015, compared to approximately $40 billion in 2014; a probable
cause is the continuation of funding relief in the Bipartisan Budget
Act of 2015.
Pension expense in 2015 declined $3.6 billion to $33.7 billion
from $37.3 billion in 2014. While one may reasonably conclude
that pension expense will increase dramatically in 2016 due to the
considerably disappointing 2015 asset performance, there are some
offsetting components that should be considered. Offsets will result
from changes in the assumptions under which pension expense is
calculated. Thirty-seven of the Milliman 100 companies indicated in
Form 10-K that they plan to adopt a “spot rate” approach, which is a refined use of the individual “spot” interest rates on the corporate
bond yield curve used to develop the actuarial liabilities or PBO. For
an upwardly sloping yield curve, the use of the spot rate method is
expected to lower interest cost and therefore total pension expense
in comparison to using the former single weighted average discount
rate methodology. In fact, had all of the Milliman 100 companies
adopted the spot rate accounting method to calculate the interest
cost component of pension expense in 2016, the pension expense
savings is estimated to be $14 billion. This calculation assumes a 20%
reduction in the interest cost for a typical company in the Milliman 100
study adopting the spot rate methodology.
De-risking transactions continued in 2015, and the estimated dollar
volume of pension risk transfers collected from the accounting
disclosures was nominally higher in 2015 ($11.6 billion) compared
to 2014 ($11.4 billion). Note that the Department of Labor prefers
the use of “pension risk transfer” (PRT) when referring to these
transactions in which the complete divestiture of DB plan obligations
to participants or to insurance companies occurs.
It is likely that PRT transactions may increase in 2016, spurred by
the significant increases during 2015 in the premiums payable to
the Pension Benefit Guaranty Corporation (PBGC). These premium
increases were part of the Highway and Transportation Funding Act
of 2014. The Bipartisan Budget Act of 2015 included additional
premium increases for future years.
We are also watching the trend of the divestiture of OPEB liabilities
from $320 billion in 2003 to $207 billion in 2015.
Weak year for investment returns irrespective of asset allocation
Rates of return earned in 2015 for the 85 pension plans with
calendar year fiscal years were tightly banded between -2% and
2% with an average return of -0.1%. Interestingly, average returns
and the dispersion of returns varied little across different asset
allocations. Of these 85 plans, 75 earned rates of return between
-2% and 2%, with seven plans earning returns less than -2% and
only three with investment returns greater than 2%.
|FIGURE 3: FIXED-INCOME ALLOCATION 50% OR HIGHER
|Calendar year fiscal years only
50% or Higher
Equity allocations in the pension portfolios dropped to 36.8% by
the end of 2015, marking their lowest concentration in the 16-year
history of the Milliman Pension Funding Study (PFS). The companies
comprising the Milliman PFS have generally shifted toward higher
allocations to fixed income investments in recent years. This trend has
surfaced as plan sponsors reconfigured allocations to de-risk their
pension plans over the past several years.
The actual asset return for the plan sponsor with the highest allocation
to equities (79.6%) was 0.9%, and this was not much better than the
return of -0.7% for the plan sponsor with lowest allocation to equities
(8.0%) in 2015. The highest asset return among all companies with
calendar year fiscal years was 4.1%, while the lowest was -4.8%.
In prior years, investment allocations made by plan sponsors had
showed a trend toward implementing liability-driven investment (LDI)
strategies. Generally, this involves shifting more assets into fixed
income strategies. However, this trend slowed during 2015. The
percentage of pension fund assets allocated to equities, fixed income,
and other investments was 36.8%, 42.7%, and 20.5%, respectively,
at the end of 2015, compared with 37.6%, 42.2%, and 20.2%,
respectively, at the end of 2014.
Unlike in 2014, when plans with high allocations to fixed income
(>50%) outperformed the other plans (13.3% average return compared
to 9.6%), in 2015 the plans with high allocations to fixed income earned
the same average rate of return as the other plans (-0.1%).
Over the last five years, the plans with consistently high allocations
to fixed income have slightly outperformed the other plans while
experiencing lower funded ratio volatility. Among the 85 companies
in the Milliman PFS with calendar year fiscal years, 16 pension
plans had fixed income allocations greater than 40% at the end of
2010 and maintained an allocation of at least 40% to fixed income
through 2015. Over this five-year period, these 16 plans experienced
lower funded ratio volatility than the other 69 plans (an average
funded ratio volatility of 3.8% versus 6.4% for the other 69 plans)
while earning a slightly higher five-year annualized rate of return (an
average of 7.6% versus 7.4%). Unlike in 2014, when these 16 plans
outperformed relative to the other 69 plans (14.0% average return
versus 9.5%), they slightly underperformed the other plans in 2015
(-0.4 average return versus 0.0%).
Overall allocations to equities decreased during 2015, resulting in
an average allocation of 36.8% — the lowest equity allocation in the
16-year history of the Milliman PFS. Only one of the 100 companies
had increases to its equity allocations of more than 10% in 2015.
Only five companies decreased their equity allocations by more than
10% in 2015, compared with 12 companies in 2014, five in 2013,
four in 2012, and 12 in 2011.
Overall allocations to fixed income increased in 2015, resulting in
an average allocation of 42.7%. Only one company had a decrease
of more than 10% in its fixed income allocation. Four companies,
however, increased their fixed income allocations by more than 10%
in 2015, compared with seven in 2014, four in 2013, three in 2012,
and six in 2011.
Other asset classes include real estate, private equity, hedge funds,
commodities, and cash equivalents. More specific details on how
investments are allocated to the other categories are generally not
available in the companies’ SEC filings. Overall allocations to other
asset classes remained stable in 2015. Seven companies increased
their allocations by 5% or more to other asset classes during 2015.
In summary, the allocation to equities was down from 60% at the end
of 2006 and the allocation to fixed income instruments was up from
29% at the end of 2006. The percentage of investments in other asset
classes was also up from the 10% allocation at the end of 2006.
Pension Risk Transfer (PRT) activities continue
Similar to 2014, plan sponsors continued to execute pension risk
transfer activities in 2015 as a way of divesting pension obligations
from their DB plans and corporate balance sheets. Large scale
pension buyout programs were transacted for four of the Milliman
100 companies as pension assets and liabilities were transferred
to an insurance company. Pfizer, Verizon Communications Inc.,
Kraft Heinz Company and Hewlett Packard reported transactions of
$2.6 billion, $2.3 billion, $1.6 billion and $1.1 billion, respectively.
Kimberly-Clark Corporation, a former Milliman 100 company not
included in the 2016 Study, had the largest PRT transfer during
2015 of $2.5 billion. The settlement was significant enough to drop
Kimberly Clark from the largest 100 plan sponsor companies listing
of the Milliman Pension Funding Study.
The 2015 PRT market was not much different when compared to the
2014 market. While the precision of extracting the dollar volume of
PRT activities is an estimate, it appears that the dollar volume in 2015
was $11.6 billion, an increase of $200 million compared to the 2014
dollar volume of $11.4 billion.
PRTs are deemed an effective way to reduce a pension plan’s
balance sheet footprint by plan sponsors, but generally they have
an adverse effect on the plan’s funded status as assets paid to
divest accrued pension benefits are higher than the corresponding actuarial liabilities that are extinguished from plans. Much of this
incongruity stems from Internal Revenue Service (IRS) pension plan
valuation rules differing from the insurance company’s underwriting
assessment of its new future risks.
Last year, we reported that a more prevalent de-risking measure came
in the form of a “lump-sum window” program in which some plan
sponsors settle the pension obligation by distributing a payment to a
specific group of former participants. However, the IRS issued Notice
2015-49 that effectively and permanently ended the ability of a plan
sponsor to offer a lump-sum settlement to retirees or their surviving
beneficiaries who were collecting annuities. On the other hand,
lump-sum offerings via windows to terminated vested plan participants
continued in 2015 and more are expected in 2016 as well.
Last year, we also reported on an analysis of mortality experience of
participants in all U.S. Defined Benefit (DB) plans. While we don’t
plan to delve into the development of life expectancy factors in this
study, we reference below a couple of noteworthy items that will
affect funded status.
1. A refinement of the mortality study by the Society of Actuaries in
October 2015 reduced expected rates of mortality improvements.
The revisions shorten life expectancy by a few years and reduced
the fiscal year end PBO. While we are unable to collect specific
details of the reduction, a 1% to 2% decrease is the anecdotal
evidence recited by employers and actuaries. There is a modest
expectation that mortality improvement assumptions will be lowered
again before the end of 2016 based on 2012 and 2013 experience
of the Social Security Administration.
2. The Bipartisan Budget Act of 2015 included a new pension law
provision that permits a plan sponsor to develop mortality tables
based on the “credibility” of its own participant data. The IRS is
said to be working diligently to draft these regulations. The IRS
is also required to update the mortality assumptions regulations for
DB plan calculations for plan sponsor minimum contribution funding
and the payment of regulated lump sums.
a. An ancillary but important issue that was part of the Bipartisan
Budget Act of 2015 was a dual increase in the flat rate and
variable rate premiums required to be paid to the PBGC in order
to insure certain accrued pension benefits to participants if an
employer becomes insolvent. The flat dollar amount will increase
to at least $80 per participant in 2019 compared to $64 in 2016.
The variable rate premium will increase to at least 4.1% of the
DB plan’s PBGC funded status deficit in 2019, from 3.0% of the
2016 deficit. A note to readers is the DB plan’s PBGC funded
status deficit is measured differently than for the funding deficit for
accounting upon which this 2016 Milliman PFS is based.
The 2015 funded ratio of 81.8% was less than we reported in the
January 2016 Milliman 100 Pension Funding Index (PFI). The January
2016 PFI funded ratio of 82.7% was based on data collected for the
2015 Milliman Pension Funding study. This revised funded ratio of
81.8% (81.4% for plans with calendar year fiscal years) reflects the
collection and collation of publicly available information.
Cash contributions were $2 billion less than we had forecasted, a
key factor for the lower funded ratio. We can only speculate that
plan sponsors used corporate capital in other ways and that they
were well funded under pension tax and corresponding ERISA rules
(which incorporate interest rate smoothing measures as introduced
per the Moving Ahead for Progress in the 21st Century Act and
further extended by the Bipartisan Budget Act of 2015), which are
much different than accounting rules. Pension tax law contributions
may use a methodology that permits averaging of interest rates for
the prior 25 years. For example, discount rates under the Bipartisan
Budget Act at the end of 2015 were closer to 6% versus the 4.25%
discount rate under accounting rules at year-end 2015.
Impact of increasing discount rates evident in 2015 financial
statements of the Milliman 100 companies
Discount rates used to measure plan obligations, determined by
reference to high quality corporate bonds, increased during 2015,
decreasing liabilities and reversing the trend from the prior year. The
median discount rate increased to 4.25% at the end of 2015 from
4.00% in 2014. The 4.00% discount rate at the end of 2014 was the
lowest in the 16-year history of the Milliman PFS. Discount rates had
been generally declining from 7.63% at the end of 1999. Discount
rates were 210 basis points higher at the end of 2008.
The impact of the increasing discount rates in 2015 and reduced PBO
was obliterated with a very disappointing investment gain of 0.9%.
This resulted in a minimal improvement in the funded status. The 2015
funding deficit of $307.4 billion is an $18.7 billion decrease over the
year-end 2014 funding deficit of $326.1 billion. It is the fourth-largest
deficit in the 16-year history of the Milliman PFS.
Pension expense—the charge to company earnings—also decreased
to $33.7 billion in 2015 as compared with $37.3 billion during fiscal
year 2014, a $3.6 billion decrease. The peak level of pension expense
was in 2012 when it was $56.3 billion. In addition, 37 of the Milliman
100 companies indicated that they were adopting a “spot rate”
approach for estimating the service and interest cost components of
net periodic benefit cost. This approach is likely to produce a pension
expense savings in the near term. In spite of the increase in discount
rates during 2015 and the change in accounting method to a spot rate approach used for the determination of service cost and interest
cost, 2016 pension expense is likely to increase, primarily due to the
investment losses experienced during 2015.
There is an expectation that the spot rate methodology may result in
unexpected PBO losses when the PBO is re-measured at the end
of fiscal year 2016 for pension disclosure. We plan to report on such
losses in the Milliman 2017 Pension Funding Study.
The effect of a 25 basis point increase in discount rates helped offset
the flat investment returns during 2015.
The 5.3% decrease in pension obligations generated by the increase
in discount rates and revisions to life expectancy assumptions used
to measure pension plan obligations (at a median rate of 4.25% at
year-end 2015, up 25 basis points from 4.00% at year-end 2014)
resulted in a liability decrease of $94.5 billion. Pension liabilities for
IBM and General Motors dropped below the $100 billion pension
obligation mark, which helped their plans to maintain or improve their
funded status even though they had investment gains/(losses) of
-0.1% and 2.3%, respectively.
The 0.9% investment gain (actual weighted average return on assets
during 2015) resulted in a decrease of $75.8 billion in the market
value of plan assets when combined with the lower contributions and
approximately $11 billion paid out in annuity purchases or lump-sum
settlements. The Milliman 100 companies had set an expectation that
2015 investment returns would be, on average, 7.2%.
Funded ratios barely increase
The funded ratio of the Milliman 100 pension plans increased during
2015 to 81.8% from 81.7% at the end of 2014 (81.6% for plans
with calendar year fiscal years in 2015, up from 81.3% for 2014). The
aggregate pension deficit decreased by $18.7 billion during these
companies’ 2015 fiscal years to $307.4 billion from an aggregate deficit of $326.1 billion at the end of 2014. For fiscal year 2015,
funded ratios ranged from a low of 46% for Delta Airlines to a high of
148% for NextEra Energy Inc.
The small increase in funded ratio reversed the 2014 result and helped
maintain a funded ratio comparable to year-end 2014. The funded ratio
had improved to 87.8% at year-end 2013. However, the funded ratio
decrease during 2014 was the largest percentage decrease after the
26.2% decrease from the surplus ratio of 105.5% in 2007 to 79.3%
in 2008. Note that there has not been a funding surplus since the
aforementioned 105.5% funded ratio in 2007.
Only eight of the 85 Milliman 100 companies with calendar year
fiscal years reported surplus funded status at year-end 2015,
compared with eight companies in 2014, 17 companies at year-end
2013, and six at year-end 2012. These numbers pale in comparison
to the 50 companies with reported surplus funded status at year-end
2007. Because of the offsetting impact of flat investment returns
and the decrease in liabilities caused by higher discount rates, 47 of
the Milliman 100 companies reported an increase in funded ratio for
2015 compared with six for 2014.
2015 pension expense decreases
There was a net decrease in 2015 pension expense: a $33.7 billion
charge to earnings ($3.6 billion lower than in 2014). This is well below
the $56.3 billion level in 2012, which reached the highest level in the
16-year history of our study. Seventeen companies recorded 2015
pension income (i.e., a credit to earnings). Seventeen companies also
recorded income in 2014 and 2013, up from 10 in 2012.
The discount rate for 2016 pension expense is based on the year-end
2015 SEC disclosures. We estimate that 2016 pension expense will
increase to $44.9 billion, an $11.2 billion increase compared with
2015, under the assumption of a continued 4.25% discount rate.
After reflecting the estimated impact of 37 of the Milliman 100 plan
sponsor companies adopting the spot rate method for calculation
of the interest cost component of pension expense, we expect a net
2016 pension expense increase of $5.9 billion (i.e., a pension expense
savings of $5.3 billion from the 37 plan sponsor companies adopting
the spot rate accounting method). This would result in a 2016 pension
expense of $39.6 billion.
The aggregate 2015 cash contributions of the Milliman 100
companies were $30.7 billion, a decrease of $9.0 billion from the
$39.7 billion contributed in 2014, and a $31.9 billion decrease from
the 2012 record high level of $62.6 billion. Contributions in 2015
were the lowest dollar volume since 2008. We speculate that this is
due to the extension of pension funding relief via the Bipartisan Budget
Act of 2015. The funded ratios under pension law are much higher
than for GAAP accounting because the IRS discount rates reflect an
averaging of the last 25 years.
Many plan sponsors may continue to contribute at these lower levels
for 2016 if they find better investment opportunities for their potential
pension contribution dollars. With interest rates at low levels, many
plan sponsors are hesitant to change asset allocations to take on
more fixed income positions and lock in their funded status. Locking
in funded status while not being fully funded essentially guarantees
a plan sponsor will need to make cash contributions to close the
On the other hand, we also expect that some plan sponsors
undertaking PRT activities (e.g., lump-sum payouts, annuity purchases,
etc.) may have to increase contributions to maintain funded status.
Some plan sponsors that want to minimize PBGC premium costs
may choose to accelerate plan funding to close pension deficits
sooner. PBGC variable rate premium calculations are based on
the pension liabilities in excess of pension assets. PBGC pension
liabilities are valued using current interest rates compared with the
25-year interest rate averages used for the IRS minimum contribution
funding calculations. PBGC variable rate premiums are calculated as
a percentage of unfunded liability. This percentage will likely rise to at
least 4.1% in 2019.
Pension deficit decreases as a percentage
of market capitalization
The total market capitalization for the Milliman 100 companies
decreased by 2.9%. The decrease in pension obligations (due to
higher discount rates) resulted in a decrease in the unfunded pension
liability as a percentage of market capitalization of 4.6% at the end
of 2015 from 4.7% at the end of 2014. Pension deficits represented
less than 10% of market capitalization for 73 of the Milliman 100
companies in 2015 and 2014 (down from 78 companies in 2013).
However, this is still an increase from 2012 when only 58 companies
had deficits that were less than 10% of their market capitalization.
Since 2011, we have had investment returns exceeding expectations in
three out of four years, and this has resulted in elevated levels of market
capitalization. There are three companies whose deficits exceed 50%
of market capitalization in 2015, up from two companies in 2014 and
one company in 2013, but down from 10 in 2012.
Investment performance lags expectations
The weighted average investment gain on pension assets for the
Milliman 100 companies’ 2015 fiscal years was 0.9%, which was
below their average expected rate of return of 7.2%. Only six of the
Milliman 100 companies exceeded their expected returns in 2015,
and all six had off-calendar year fiscal years. But 82 companies in
2014 exceeded their expected returns compared to 76 in 2013,
89 in 2012, and 98 in 2010.
While the 2015 investment return was disappointing, investment
gains above expectation during five out of the last seven years have
been earned by the plan sponsors of the Milliman 100 companies.
At December 31, 2015, total asset levels were $1.378 trillion. This is
$78 billion above the value of $1.300 trillion at the end of 2007 prior
to the collapse of the worldwide financial markets.
During 2015, the combination of annuity purchases and lump-sum
settlements offset by minor investment gains, decreased the market
value of assets by $76 billion. The Milliman 100 companies’ actual
investment return for 2015 was $11.7 billion compared to the expected
return of $97.6 billion, a difference of $85.9 billion. This was the largest
deviation between actual and expected returns since 2008. For the
five-year period ending in 2015, investment performance has averaged
7.75% compounded annually. There were three years of investment
losses over the past 16 years (2001, 2002, and 2008), contributing to
an annualized investment return of only 5.91% over that period.
Expected rates of return
Companies continued to lower their expected rates of return on plan
assets to an average of 7.2% for 2015 as compared with 7.3% for
2014, 7.4% for 2013, 7.6% for 2012, 7.8% for 2011, and 8.0% for
2010. This represents a significant drop from the average expected
rate of return of 9.4% back in 2000.
Only one of the Milliman 100 companies utilized an expected rate
of return for 2015, 2014, and 2013 of at least 9% whereas three
companies also assumed an expected rate of return of at least 9% in
2012, 2011, and 2010, but this was down from five in 2009 and a
high of 83 in 2000.
What to expect in 2016 and beyond
Our expectations in the coming year include:
- Contributions are expected to stay at their current low levels given the continued effect of interest rate relief for minimum contribution funding requirements and different use of corporate capital.
- Pension expense is expected to increase over the 2015 level primarily due to the investment losses experienced during 2015. The expense increase will be tempered by the rise in discount rates during 2015 and change to the spot rate accounting method for determining interest cost by over a third of the Milliman 100 companies.
- PBO losses at year-end 2016 due to the use of the aforementioned spot rate methods for determining the interest cost component of pension expense.
- PBO gains due to further refinements in mortality assumptions.
- IRS is expected to release guidance on mortality tables affecting 2017 minimum funding requirements and accelerated forms of payment such as lump sums.
- Further de-risking activities in the form of lump-sum windows for terminated vested participants.
- Further pension risk transfer activities depending on movement of discount rates and whether assets rebound in 2016.
HISTORICAL VALUES (All dollar amounts in millions. | Numbers may not add up correctly due to rounding.)
The table below shows the trend of the divestiture of OPEB liabilities from $320 billion in 2003 to $207 billion in 2015.
Who are the Milliman 100 companies?
The Milliman 100 companies are the 100 U.S. public companies with
the largest defined benefit pension plan assets for which a 2015
annual report was released by March 4, 2016.
This 2016 report is Milliman’s 16th annual study. The total value of the
pension plan assets of the Milliman 100 companies was more than
$1.37 trillion at the end of 2015.
About the study
The results of the Milliman 2016 Pension Funding Study are
based on the pension plan accounting information disclosed in the
footnotes to the companies’ Form 10-K annual reports for the 2015
fiscal year and for previous fiscal years. These figures represent the
GAAP accounting information that public companies are required
to report under Financial Accounting Standards Board Accounting
Standards Codification Subtopics 715-20, 715-30, and 715-60. In
addition to providing the financial information on the funded status
of their U.S. qualified pension plans, the footnotes may also include
figures for the companies’ nonqualified and foreign plans, both of
which are often unfunded or subject to different funding standards
from those for U.S. qualified pension plans. The information, data,
and footnotes do not represent the funded status of the companies’
U.S. qualified pension plans under ERISA.
15 of the companies in the 2016 Milliman Pension Funding Study
had fiscal years other than the calendar year. The 2016 Study
includes four new companies to reflect mergers, acquisitions, and
other corporate transactions during 2015. Privately held companies,
mutual insurance companies, and U.S. subsidiaries of foreign parents
were excluded from the study.
The results of the 2016 Study will be used to update the Milliman
100 Pension Funding Index as of December 31, 2015, the basis of
which will be used for projections in 2016 and beyond. The Milliman
100 Pension Funding Index is published on a monthly basis and
reflects the effect of market returns and interest rate changes on
pension funded status.
About the authors
Zorast Wadia, FSA, EA, MAAA, is a principal and consulting actuary
in the New York office of Milliman. He has more than 16 years of
experience in advising plan sponsors on their retirement programs.
Zorast has expertise in the valuation of qualified and nonqualified
plans. He also has expertise in the areas of pension plan compliance,
design, and risk management. Contact him at +1 646 473 3315
John W. Ehrhardt, FSA, EA, MAAA, is a principal and consulting
actuary in the New York office of Milliman. He has more than
30 years of experience in advising plan sponsors on their corporate
retirement programs. John specializes in the redesign of traditional
pension plans, including the conversion of these plans to hybrid plans,
such as cash balance and pension equity plans. Contact him at
+1 646 473 3300 or firstname.lastname@example.org.
Alan H. Perry, FSA, CFA, MAAA, is a principal and consulting actuary
in the Philadelphia office of Milliman. He has more than 20 years
of experience in advising plan sponsors on asset allocation and
financial risk management. Alan specializes in the development of
investment policies by performing asset-liability studies that focus on
asset mix, liability-driven investing, and risk hedging. Contact him at
+1 610 975 8046 or email@example.com.
Charles J. Clark, ASA, EA, MAAA, is a principal and director of
the employee benefits research group in the Washington, DC and
New York offices of Milliman. He has over 35 years of experience
as a consulting actuary. Charles provides analysis of employee
benefit legislation, regulations, and accounting standards to
Milliman consultants. He has worked extensively with plan sponsors,
Washington, D.C. employee benefits trade groups, and lawmakers on
employee benefit program strategy, design, pricing, and interpretation.
Contact him at +1 646 473 3303 or firstname.lastname@example.org.
The authors thank the following Milliman colleagues for their assistance in compiling the figures and editing the report for the Milliman
2016 Pension Funding Study: Mary Der, Karen Drake, Jeremy Engdahl-Johnson, Jennifer Faber, Kevin Ferris, Chris Goodman, Heng Lim,
Elizabeth Mattoon, Janie Pascual, Jamie Phillips, Lesley Pink, Glorianne Ponsart, Rebecca Ross, Javier Sanabría, Esther Schewel, Sydnie Wells,
Mike Wilson, Susan Yearick, Lynn Yu, and Delbert Zamora.