The funded status of the 100 largest corporate pensions dropped by $6 billion in March, increasing the deficit to $349 billion, according to the Milliman 100 Pension Funding Index.

The funded ratio fell to 81%, down from 81.2% at the end of February.

During the past year, the cumulative asset return for these pensions has been 10.35%, but it wasn’t enough to counteract the “unceasing decline in discount rates,” according to Milliman, which has pushed the 100 Pension Funding Index to a funded status deficit of $96 billion.

The discount rate on March 31, 2014, was 4.30%, 65 basis points higher than what it was on March 31, 2015. Over the past 12 months, the funded ratio of the Milliman 100 has decreased to 81% from 84.8%.

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March’s flat investment performance decreased the Milliman 100 asset value to $1.483 trillion from $1.485 trillion at the end of February, based on a 0.25% investment gain for the month. In its 2015 Milliman Pension Funding Study, which was released at the beginning of April, it reported that the monthly median expected investment return for 2014 was 0.59% or 7.3% over the year.

Projected pension liabilities increased by $4 billion in March, raising the Milliman 100 PFI value to $1.832 trillion from $1.828 trillion at the end of February. The increase is attributed to a 2-basis-point drop in the monthly discount rate to 3.65% for March from 3.67% for February, according to Milliman.

In its 2015 pension funding study, Milliman projected that the funded status of the top 100 pension plans would increase if they achieved a 7.3% median asset return for their portfolios and the current discount rate of 3.65% were maintained during 2015 and 2016.

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“This would result in a projected pension deficit of $321 billion (funded ratio of 82.5%) by the end of 2015 and a projected pension deficit of $278 billion (funded ratio of 84.9%) by the end of 2016,” Milliman stated. Milliman projected $32 billion in aggregate contributions in 2015 and $36 billion in contributions in 2016 to achieve these numbers.

Milliman’s optimistic forecast states that the funded ratio of the top 100 corporate pension plans could climb to 90% by the end of 2015 and 104% by the end of 2016 with interest rates rising to 4.10% at the end of 2015 and 4.70% by the end of 2016 and asset gains of 11.3% annually. Its pessimistic forecast, with similar interest rate and asset movements (3.20% discount rate at the end of 2015 and 2.60% by the end of 2016 and 3.3% annual returns), the funded ratio would decline to 75% by the end of 2015 and 68% by the end of 2016, Milliman said.

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