Funded status of largest U.S. corporate pension plans ends 2023 at 100%

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[{"type":"text","content":"Equity gains helped to offset liability headwinds from falling interest rates, bringing pension plans to full funding for the first time since the 2008 financial crisis\nARLINGTON, Va., Jan. 02, 2024 (GLOBE NEWSWIRE) -- 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 Year2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023Aggregatelevel107% 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, typi...

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