Don’t Underestimate the Power of the Discount Rate

2011 proved to be yet another challenging year for corporate defined benefit plans, with prospects for an improving funded ratio in the first half of the year dashed by falling interest rates, and rising liabilities in the second half. The aggregate funded status (measured in accordance with FASB regulations) for S&P 1500 companies offering DB plans fell from 81% to 75% during the year , and for the largest 100 plans, the situation was even worse: their aggregate funded status declined from 84% to 72%.