By: Russ Kamp, CEO, Ryan ALM, Inc.

Milliman has provided its monthly update on the health of corporate America’s largest 100 pension plans with the release of the Milliman 100 Pension Funding Index (PFI). The good news continues, as the funded ratio for the PFI plans advanced last month from December’s 104.8% to 105.8% as of January 31, 2025. The improved funded ratio reflected both asset growth of $9 billion as a result of a 1.19% return for the index, while a minimal increase of 1 basis point in the discount rate (now 5.6%) reduced plan liabilities to $1.237 trillion. According to the Zorast Wadia, author of the Milliman PFI, the improved funded ratio marks a 27-month high.

Zorast went on to say, “With Fed rate cuts still a possibility this year, prudent asset-liability management remains a key directive for plan sponsors to preserve the funded status gains achieved thus far.” We don’t make interest rate forecasts at Ryan ALM, but we wholeheartedly agree with Zorast regarding the prudence of preserving the impressive funding gains realized during the last couple of years. Given the stretched equity valuations, taking risk of the table and securing the promised benefits through a cash flow matching strategy makes great sense.