The funded status of the 100 largest U.S. corporate defined benefit pension plans increased by $12 billion during January, as measured by the Milliman 100 Pension Funding Index (PFI). The funding surplus improved to $71 billion as a result of liability decreases and investment returns that surpassed expectations. Pension liabilities fell during the month due to a small increase in the benchmark corporate bond interest rates used to value those liabilities. As of January 31, the PFI funded ratio climbed to 105.8%, up from 104.8% at the beginning of the year.
As a result of January’s 1.19% investment return, the market value of PFI plan assets increased by $9 billion, to $1.308 trillion as of January 31. The monthly expected investment return during 2024 was 0.52% (6.4% annualized), as reported in our 2024 Milliman Pension Funding Study (PFS).
The projected benefit obligation, or pension liabilities, decreased to $1.237 trillion at the end of January 2025 from $1.240 trillion at the end of December 2024. The change resulted from a meager increase of 1 basis point in the monthly discount rate, to 5.60% for January from 5.59% for December 2024.
Highlights
| $ BILLION | FUNDED PERCENTAGE | |||
|---|---|---|---|---|
| MV | PBO | FUNDED STATUS | ||
| December | 1,299 | 1,240 | 59 | 104.8% |
| January | 1,308 | 1,237 | 71 | 105.8% |
| Monthly change | +9 | (3) | +12 | 1.0% |
| YTD Change | +9 | (3) | +12 | 1.0% |
Note: Numbers may not add up precisely due to rounding
Over the last 12 months (February 2024 to January 2025), the cumulative asset return for these pension plans has been 5.85%, and the Milliman 100 PFI funded status surplus has improved by $70 billion. Discount rate increases drove the funded status improvement, climbing by 46 basis points over that period. The funded ratio of the Milliman 100 companies has increased to 105.8% from 100.1% over the past 12 months.
The projected asset and liability figures presented in this analysis will be adjusted as part of Milliman’s annual 2025 PFS, which will summarize the most recent plan sponsor financials reported to the Securities and Exchange Commission. The 2025 PFS will also reflect reported pension settlement and annuity purchase activities that occurred during 2024. De-risking transactions generally result in reductions in pension funded status since the assets paid to the participants or assumed by the insurance companies as part of the risk transfer are larger than the corresponding liabilities that are extinguished from the balance sheets. To offset this decrease, many companies engaging in de-risking transactions make additional cash contributions to their pension plans to improve the plan’s funded status. We expect to publish our comprehensive PFS report in April.
Figure 1: Milliman 100 Pension Funding Index — Pension surplus/deficit
Figure 2: Milliman 100 Pension Funding Index — Pension funded ratio
2025-2026 projections
If the Milliman 100 PFI companies were to achieve the expected 6.4% median asset return (as per the 2024 PFS), and if the current discount rate of 5.60% remains unchanged throughout 2025 and 2026, we forecast that the funded status of the surveyed plans would increase. The pension surplus is projected to be $82 billion (funded ratio of 106.7%) by the end of 2025 and $94 billion (funded ratio of 107.7%) by the end of 2026. For the purposes of this forecast, we have assumed 2025 and 2026 aggregate annual contributions of $25 billion.
Under an optimistic forecast with rising interest rates (reaching 6.15% by the end of 2025 and 6.75% by the end of 2026) and annual asset returns of 10.4%, the funded ratio is projected to climb to 117% by the end of 2025 and 130% by the end of 2026. Under a pessimistic forecast with similar interest rate and asset movements (5.05% discount rate at the end of 2025 and 4.45% by the end of 2026 and 2.4% annual asset returns), the funded ratio is projected to decline to 97% by the end of 2025 and 88% by the end of 2026.
Milliman 100 Pension Funding Index - February 2025 (all dollar amounts in millions)
Pension asset and liability returns
About the Milliman 100 monthly Pension Funding Index
For the past 24 years, Milliman has conducted an annual study of the 100 largest defined benefit pension plans sponsored by U.S. public companies. The Milliman 100 Pension Funding Index projects the funded status for pension plans included in our study, reflecting the impact of market returns and interest rate changes on pension funded status, utilizing the actual reported asset values, liabilities, and asset allocations of the companies’ pension plans.
The results of the Milliman 100 Pension Funding Index were based on the actual pension plan accounting information disclosed in the footnotes to the companies’ annual reports for the 2023 fiscal year and for previous fiscal years. This pension plan accounting disclosure information was summarized as part of the Milliman 2024 Pension Funding Study, which was published on April 23, 2024. In addition to providing the financial information on the funded status of 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 than those for U.S. qualified pension plans. They do not represent the funded status of the companies’ U.S. qualified pension plans under ERISA.