The number of large U.S. employers facing relatively high degrees of financial risk due to pension liabilities has declined sharply, according to a report by Watson Wyatt.
“Thanks to a sound economy and considerable corporate contributions, America’s pension plans are generally on firmer financial footing than they were two years ago,” says Mark Warshawsky, the company’s director of retirement research.
In 2005, pension plan liabilities of Fortune 1000 companies that sponsored defined benefit(DB)plans posed relatively high amounts of financial risk for 9% of firms, dowm from 17% in 2003.
Pension health will likely continue to improve because of the Federal Reserve’s decision to raise interest rates, strong stock market returns in 2006, along with new investment strategies and increased employer funding.
“With anticipated improvements in pension plan funding due in part to new rules and reductions in pension risk,” he says, “concerns about the strength of our pension system should be greatly alleviated.”
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