The pension funded status of the largest corporate sponsors in the United States increased sharply in 2013 due primarily to rising interest rates (which lowered liabilities) and a strong stock market.
The analysis by Towers Watson indicates that the aggregate pension funded status is estimated to be 93% at the end of 2013, a sharp jump from 77% at the end of 2012 but still well below the 106% funding at the end of 2007.
Overall, pension plan funding improved by US$285 billion ($303.1 billion) last year, leaving a deficit of US$99 billion ($105.3 billion) at the end of 2013.
“The strong stock market and higher interest rates last year gave plan sponsors the one-two punch they needed to cut the funding deficit of their corporate pension plans by nearly 75%,” says Alan Glickstein, a senior retirement consultant at Towers Watson. “As a result of the funded status improvement, funding ratios are now at their highest levels since the financial crisis of 2008 but still well below 100%, a level reached only three times since 2000.”
The companies analyzed represent 418 Fortune 1000 firms with December fiscal year-end dates for which complete data were available. The 2013 figures are estimates of U.S. plan assets and liabilities. The earlier figures are actual. Actual year-end 2013 results will not be publicly available until the spring.
The Towers Watson analysis estimates that companies contributed US$48.8 billion ($51.9 billion) to their pension plans in 2013—23% less than in 2012.
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