During the fourth quarter of 2014 (Q4 2014), the funded status of the model pension plan examined in each issue of Prism decreased by 3 percentage points: from 91 percent to 88 percent. This decrease was driven by a liability increase of 4 percent and an asset return of 1 percent.
The Q4 change in the funded status of the model pension plan does not reflect new mortality assumptions, which typically would decrease the funded status by 6 to 8 percent.
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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