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Funded status of largest U.S. corporate pension plans slipped in 2018, Willis Towers Watson analysis finds
Funded status of largest U.S. corporate pension plans slipped in 2018
Willis Towers Watson
2 Jan 2019 United States Funding and Minimum Funding Requirement, Investment - General, Investment - Performance, Scheme Issues & Trends, Surpluses and Deficits
Key Details:
  • The funded status of the nationís largest corporate pension plans slipped at the end of 2018 as a sharp decline in the stock market during the fourth quarter offset what looked to be a second consecutive year of improved funding, according to an analysis by Willis Towers Watson, a leading global advisory, broking and solutions company.
  • Willis Towers Watson examined pension plan data for 389 Fortune 1000 companies that sponsor US defined benefit pension plans and have a December fiscal-year-end date. Results indicate that the aggregate pension funded status is estimated to be 84% at the end of 2018, compared with 85% at the end of 2017. After the first nine months of 2018, the aggregate pension funded status stood at 90%. The analysis also found the pension deficit is projected to be $255bn at the end of 2018, slightly lower than the $260bn deficit at the end of 2017.

Year
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Aggregate level
106%
77%
81%
84%
78%
77%
89%
81%
81%
81%
85%
84%

* Estimated
  • According to the analysis, pension plan assets declined in 2018 from $1.48trn at the end of 2017 to an estimated $1.33trn at the end of 2018. Overall investment returns are estimated to have averaged a negative 4.7% in 2018, although returns varied significantly by asset class. Domestic large capitalization equities lost 4% while domestic small/mid-capitalization equities realized losses of 10%. Aggregate bonds provided no return (0%); long corporate and long government bonds, typically used in liability-driven investing strategies, realized losses of 7% and 2%, respectively.
  • The Willis Towers Watson analysis estimates these companies contributed $47bn to their pension plans in 2018, as many plan sponsors took advantage of deductions at the older, higher tax rates which existed before the tax law changes. Total pension obligations declined from $1.74trn in 2017 to an estimated $1.59 trn in 2018.

Notes
  • Willis Towers Watson analysed 389 Fortune 1000 companies with December fiscal-year-end dates for which complete data were available. The 2018 figures are estimates of U.S. plan assets and liabilities. The earlier figures are actual. Actual year-end 2018 results will be publicly available in a few months.


source: Willis Towers Watson Press Release
E11134882