During the first quarter of 2015 (Q1 2015), the funded status of the model pension plan examined in each issue of Prism decreased by 2 percentage points: from 81 percent to 79 percent. This decrease was the result of a 3 percent liability increase and flat investment performance during the quarter.
The Q4 funding ratio in this issue of Prism was reset to incorporate the fact that many plan sponsors changed their mortality assumption at year-end to reflect improved longevity.
Plan sponsors should examine changes in their own defined benefit plans’ assets, liabilities and funded ratios from the vantage point of both accounting and funding metrics.
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