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Pension Funding Improves Among Large Companies
Business & Legal Reports News
August 5, 2004
The funded status of large company pension plans improved from an average of 82 percent in 2002 to 88 percent in 2003, according to an analysis by Watson Wyatt, a consulting firm.
The funded status of a pension plan is the ratio of the value of its assets to the estimated cost of its accrued pension obligations.
During the period studied, pension plan liabilities increased by nearly $125 billion or about 11 percent, but assets increased by $172.4 billion or about 18 percent. The analysis was based on information for defined benefit pension plans at 622 of the nation's 1,000 largest companies.
"After three years of low interest rates and weak investment performance, last year's increase in funded status is a welcome change," says Kevin Wagner, a consulting actuary at Watson Wyatt. "Many employers and participants should be heartened that their pension plans remain well-positioned to pay retirement benefits."
The improvement in the funded status can be attributed to stronger investment returns and the nearly $72 billion the studied employers contributed to their pension plans in 2003, according to the firm.
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© 2002 Global Action on Aging
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