Funded status of largest U.S. corporate pension plans ends 2023 at 100%
02 Janeiro 2024 - 12:23PM
The funded status of the nation’s largest corporate defined benefit
(DB) pension plans attained an important milestone in 2023 as
investment returns outpaced pension liability movements created by
falling interest rates, according to an analysis by WTW (NASDAQ:
WTW), a leading global advisory, broking and solutions company.
WTW examined pension plan data for 358 Fortune 1000 companies
that sponsor U.S. DB pension plans and have a December fiscal
year-end date. The aggregate pension funded status of these plans
at the end of 2023 is estimated to be 100%, two percentage points
higher than 98% at the end of 2022. The analysis found the funding
deficit has closed, improved from the $25 billion deficit at the
end of 2022. Pension obligations declined slightly (3%) from $1.23
trillion at the end of 2022 to an estimated $1.19 trillion at the
end of 2023.
Fortune 1000 aggregate
pension plan funding levels
Year |
2007 |
|
2008 |
|
2009 |
|
2010 |
|
2011 |
|
2012 |
|
2013 |
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 |
|
2019 |
|
2020 |
|
2021 |
|
2022 |
|
2023 |
Aggregatelevel |
107% |
|
77% |
|
81% |
|
84% |
|
78% |
|
77% |
|
89% |
|
81% |
|
81% |
|
81% |
|
85% |
|
86% |
|
87% |
|
88% |
|
95% |
|
98% |
|
100%* |
*Estimated
“The improvement in the financial health of corporate pension
plans in 2023 is welcome news to plan sponsors,” said Jason
Wilhite, senior director, Retirement, WTW. “Last year proved to be
an up and down year for interest rates and equity markets,
particularly during the fourth quarter. But overall, funded status
remained relatively stable as interest rates and equity markets
largely offset each other, yet it ended the year reaching an
important threshold. Additionally, many plan sponsors have made
changes to their financial management strategy over the years that
are designed to protect funded status.”
According to the analysis, pension plan assets declined 1% in
2023, finishing the year at $1.19 trillion. Overall investment
returns are estimated to have averaged 10.4% in 2023, although
returns varied significantly by asset class. Domestic large
capitalization equities increased by 26%, while domestic
small/mid-capitalization equities rose by 17%. Aggregate bonds
recognized gains of 6%, while long corporate and long government
bonds, typically used in liability-driven investing strategies,
realized gains of 11% and 3%, respectively. While investment
returns were positive, the decline in assets year over year
resulted from another active year in pension risk transfers and
cash contributions that were lower than in historical years.
“As we move into 2024, plan sponsors will want to ensure that
the cost and risk associated with their DB and other retirement
plans remain aligned with their financial objectives. And while DB
plans overall are in a strong funded position, the outlook may vary
widely based on an individual plan’s position. Some employers may
need to accelerate future cash contributions, while others may find
that a well-funded plan provides them with additional flexibility
to reduce risk or even finance other retirement benefits for
employees,” said Joanie Roberts, senior director, Retirement,
WTW.
About the analysis
WTW analyzed 358 Fortune 1000 companies with December fiscal
year-end dates for which complete data were available. The 2023
figures are estimates of U.S. plan assets and liabilities. The
earlier figures are actual. Actual year-end 2023 results will be
publicly available in a few months.
About WTW
At WTW (NASDAQ: WTW), we provide data-driven, insight-led
solutions in the areas of people, risk and capital. Leveraging the
global view and local expertise of our colleagues serving 140
countries and markets, we help organizations sharpen their
strategy, enhance organizational resilience, motivate their
workforce and maximize performance.
Working shoulder to shoulder with our clients, we uncover
opportunities for sustainable success—and provide perspective that
moves you. Learn more at wtwco.com.
Media contacts
Ed Emerman: +1 609 240 2766
eemerman@eaglepr.com
Ileana Feoli: +1 212 309 5504
ileana.feoli@wtwco.com
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