By some measures, corporate pension plans fared well in 2019, while by others they did not — so their overall health was largely unchanged, says a new study.
In a new analysis that looked at data concerning 376 Fortune 1000 companies that sponsor pension plans and end their fiscal year on Dec. 31, Willis Towers Watson found that corporate defined benefit plans ended 2019 at roughly the position where they were at the start of the year. But while those results were a wash, there are ways in which they made progress in 2019, but others in which they lost ground.
Glass Half Full
The study says that corporate DB plans’ funded status improved slightly in 2019, and stood at 87%, whereas it was 86% in 2018. And, they also report, the 2019 results are part of a sustained improvement in funded status since 2016.
The study also reports that pension deficits were down by $6 billion to $216 billion, and pension grew from $1.36 trillion to $1.50 trillion.
But strongest of all were investment returns, says Willis Towers Watson. They say that overall, estimated returns for 2019 were just slightly below 20%. Growth as stronger for some investment returns than others, though:
- domestic large capitalization equities: +32%
- domestic small/mid-capitalization equities: +28%
- long corporate bonds: + 23%
- long government bonds: + 15%
- aggregate bonds: +9%
In an earlier study, Milliman said that investment returns were the reason for improved funded status and the higher market value of the 100 largest corporate pension plans in November.
Glass Half Empty
There was not only good news, however, said Willis Towers Watson. Employers’ contributions to their pension plans were half what they were in 2018, and amounted to $26.3 billion in 2019.
Pension obligations grew in 2019 from $1.58 trillion to $1.72 trillion, Willis Towers Watson said; Milliman also said a month earlier that projected benefit obligations in November were higher than those at the start of 2019.
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