The pension funded status of the nation's largest corporate sponsors increased by 16 percentage points to reach their highest levels since 2007, according to Towers Watson.
The company analyzed pension plan data for the 418 Fortune 1000 companies that sponsor U.S. tax-qualified defined benefit pension plans and have a December fiscal-year-end date. The aggregate pension funded status is estimated to be 93 percent at the end of 2013, a sharp jump from 77 percent at the end of 2012. That figure is still well below the 106 percent funded status logged at the end of 2007.
Overall, pension plan funding improved by $285 billion last year, leaving a deficit of $99 billion at the end of 2013.
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"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 percent," said 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 percent, a level reached only three times since 2000. The improved funding environment, together with legislative funding stabilization enacted in 2012, gave plan sponsors some relief from record levels of contributions since the 2008 recession."
The Towers Watson analysis estimates that companies contributed $48.8 billion to their pension plans in 2013 — 23 percent less than in 2012. Pension plan assets increased by an estimated 9 percent in 2013, from $1,288 billion at the end of 2012 to an estimated $1,409 billion at the end of last year.
Towers Watson is a global professional services company that helps organizations improve performance through effective people, risk and financial management.
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