The pension risk management market couldbe in for a boost in business.

Discount rates are on a downward trend, and that’s not onlyincreasing pension liabilities, it’s making sponsor contributionrequirements more costly.

A study from investment management company Conning looked at thepension risk transfer market, and found that funding statusvolatility is continuing to take a toll on balance sheets,long-term financial obligations and contributions.

The uncertainty introduced by volatility, coupled withunderfunded defined benefit liabilities, are exerting pressure oncompanies and causing them to examine the possibility of derisking.And falling discount rates are contributing to the downwardpressure on funded status.

Milliman reported that the funded status of the 100 largestcorporate defined benefit pension plans worsened by $25 billionduring April, as measured by the Milliman 100 Pension Funding Index(PFI). The deficit, it said, rose to $411 billion, primarily due toa decrease in the benchmark corporate bond interest rates used tovalue pension liabilities.

Discount rates, Milliman said, have fallen every month so farthis year, with funding ratios following followed suit. In Aprilalone, a decrease of 13 basis points in the monthly discount ratelowered rates to 3.65 percent.

In 2015, the average discount rate actuallyincreased, from 4 percent to 4.4 percent, according toRussell Investments. That was thanks to an increase in the federalfunds rate—the first in almost 10 years—but the effect hasn’t beenlarge or lasting.

Nor would it necessarily be so, according to Alan Glickstein, asenior retirement consultant at Towers Watson. As a rule of thumb,Glickstein says that for every100-basis-point move on the corporate bond rate, pensionliabilities fluctuate 15 percent.

Aon Hewitt’s Pension Risk Tracker also indicated that fundedstatus fell during April, to 77.6 percent.

Conning examined the effect of funding status volatility oncompanies in 2015 by analyzing data from the 20 largest U.S.corporate DB plans. These 20 companies, the report said, accountedfor 43 percent of aggregate DB plan assets of the 238 U.S.corporate DB plans with $1 billion or more in assets. With theimprovement in funding status in 2015 for these companies, plansponsors broadly experienced a smaller impact on their balancesheets, long-term financial obligations and contributions than in2014.

However, a key challenge facing plans in 2016, it said, is “thedecrease in discount rates used to calculate both balance sheet andcontribution liabilities…. Rates are likely to remain low orperhaps decrease over the short term.” Contributions will thereforeget more expensive, putting pressure on companies’ bottom lines.When coupled with volatility, which “reduced assets and assetreturns in 2015,” Conning said, “pensions risk management is likelyto remain a key focus for many plan sponsors.”