Fourth Quarter 2014 Pension Plan Experience

Abstract

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.