The financial health of the nation’s largest corporate defined benefit pension plans improved significantly in 2021 as strong investment returns and rising interest rates help to drive their aggregate funded status to its best level since before the 2008 financial crisis, according to an analysis by Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company.

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Willis Towers Watson examined pension plan data for 361 Fortune 1000 companies that sponsor U.S. defined benefit pension plans and have a December fiscal year-end date. The aggregate pension funded status of these plans is estimated to be 96% at the end of 2021, up sharply from 88% at the end of 2020. That is the highest funded status since 2007, the last year defined benefit plans of the Fortune 1000 were fully funded. The analysis also found the funding deficit is projected to be $63 billion at the end of 2021, significantly less than the $232 billion deficit at the end of 2020. Pension obligations decreased 8% from $1.89 trillion at the end of 2020 to an estimated $1.74 trillion at the end of 2021.

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Fortune 1000 aggregate pension plan funding levels

*Estimated

“Defined benefit plan sponsors made great headway in 2021 on their path toward full funding, something many plans haven’t experienced since prior to the 2008 financial crisis,” said Joseph Gamzon, managing director, Retirement, Willis Towers Watson. “And since 2008, many sponsors have better positioned their plans relative to market risk, primarily through changes in investment allocation and settlement activity.”

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