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If Interest Rates Continue to Rise, Further Improvement in Funded Status is Expected

In the same survey, Milliman also projected that the plans could see an improvement in the funded status to 78.7% by the end of 2017 if the discount rate continues to hold and plans earn their median expected return of 7.2%. However, if interest rates were to rise to 4.17% (75 basis points, or three Fed rate increases), defined benefit plans could end 2017 with a funded status around 91%. Milliman assumed assets would return 11.2% during 2017 in their analysis, which could be a tall order in a rising interest rate environment.