All-time low discount rates used to determine defined-benefit (DB) pension plans' liabilities, along with equity market volatility, are forcing more plan sponsors to re-examine the risk component in liability-driven investment (LDI) management strategies.
The aggregate funded deficit of the 100 largest corporate defined-benefit plans expanded by $64 billion in the third quarter of 2019, despite an $18 billion increase in the value of plan assets, according to Milliman's Pension Funding Index. Plan liabilities increased by $82 billion, thanks to declining discount rates. From the end of September 2018 to the end of September this year, the discount rate sank from 4.18 percent to 3.09 percent.
Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.
Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
- Informative weekly newsletter featuring news, analysis, real-world case studies, and other critical content
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
