Two months of bond sell-off activity, which drove interest rates higher, has resulted in a reduction in benefit obligations for the Milliman 100 Pension Funding Index.
The Index, which examines the 100 largest defined benefit pension plans sponsored by U.S. public companies, markedly improved in June, even as the Federal Reserve announced the central bank will continue to wind down its bond-buying program and cautioned it will have no impact on its overall easy money policies designed to keep long-term interest rates down.
Fed policies and goals aside, the rise in benchmark corporate bond interest rates, used to value pension liabilities, allowed the 100 companies in the index to lower their obligations by $47 billion.
In June, pension liabilities decreased by $72 billion, bringing the index value down to $1.54 trillion from $1.61 trillion in May.
