The latest data from the Society of Actuaries shows good newsfor the state of single-employer pension plans.

According to the SOA’s recently updated analysis of pension plans in the private sector, 89 percentof single-employer plans were not carrying any unfunded liabilityat the end of 2014, and even more are fully funded when factoringForm 5500 data available for the part of 2015.

That most recent analysis shows the continued improvement in theoverall status of single-employer pension plans since the financialcrisis. In 2013, 78 percent of plans were fully funded.

But the SOA’s analysis also shows that the single-employersystem reaps considerable benefits from so-called pensionsmoothing, a statutorily permissible-- albeitcontroversial--accounting practice.

The Moving Ahead for Progress in the 21^st CenturyAct, an infrastructure spending bill signed into law in 2012 byPresident Obama, included a provision allowing sponsors of definedbenefit plans to apply higher interest rates to assess futureliabilities.

The pension smoothing provision was written as a “pay for” tofund the spending bill.

By allowing sponsors to use the 25-year average of thecorporate bond yield, instead of lower near-term rates, plans wereallowed to estimate lower liability values, in turn requiring lowerannual contributions to plans.

Lower contribution rates meant less money corporations couldwrite off at tax time, translating to more revenue the feds coulduse to fund infrastructure spending.

But pension smoothing also has the effect of artificiallyimproving pensions’ funded status, say critics of the tactic.According to the SOA, the impact of pension smoothing on planfunding is considerable.

When applying lower, “unsmoothed” interest rates to assessliabilities, the number of fully funded plans drops from 89 percentto 28 percent.

What’s more, pension smoothing vastly affects the number ofplans that contribute enough to maintain their unfunded liabilityand maintain a 7-year funding pace, or the amount of annualcontributions needed to close a funding gap over seven years. Bylaw, those two benchmarks are used to assess a plan’s annualminimum contribution rate.

Using smoothed interest rates, 8 percent of plans with anunfunded liability contributed enough to at least maintain fundingratios in 2014. Only 3 percent of unfunded plans fell short of thatbenchmark.

But when applying unsmoothed rates, almost half of the 72percent of plans with an unfunded liability did not contributeenough to maintain funding ratios in 2014.

And 55 percent of plans did not contribute enough to closefunding gaps within seven years.

In 2014, the smoothed corporate bond rate used to projectliabilities was around 6.5 percent, compared to the unsmoothed rateof about 4.75 percent.

The overall pension liability for single employer plans was $1.9trillion in 2014 when using the higher smoothed rate. As a lot, theplans were 98 percent funded with $30 billion in unfunded pensionobligations.

But when applying the lower unsmoothed rate, total liabilitiesjump to $2.4 trillion, with a funded rate of 91 percent, and $218billion in unfunded liabilities, according to the SOA.