Milliman, which tracks the status of the largest 100 corporate defined benefit plans in the U.S., reported that corporate pension funding is near its all-time highs in the recent results of its 2024 corporate pension funding study.

Among Milliman’s findings, the funded status of these plans declined slightly from 99.4% to 98.5%, due to a slight decline in plan discount rates. The funded deficit of these plans increased from $8.5 billion to $19.9 billion in 2023. However, this is far from the $188 billion to $382 billion deficit range that persisted between 2008 and 2020.

Nearly half of the largest 100 U.S. corporate DB plans have a funded status of greater than 100%. Of the corporate plans surveyed by Milliman, none of them had a funded status of less than 75%. Still, the average funded ratio of these plans exceeded 120% in 2000 and hit a low of just over 75% in 2012.

According to the study, three plans had a funded ratio greater than 140%. Twenty-one plans had a ratio between 95% and 100%, which was the largest group, measured in 5- percentage-point increments. The second largest group was those plans between 85% and 90% funded, with 16 plans in this category.

With funded ratios at all-time highs, the plan sponsors are debating what to do with their funding surpluses.

“With plan funding ratios at historic highs, plan sponsors should review their investment risk profiles,” said Owais Rana, head of investment solutions at Principal Asset Management, in a separate report. “Those not needing another year of large net returns may want to consider reducing risk if not transferring risk out completely.”

IBM made headlines in 2023 when it announced that it would reopen its defined benefit plan, making use of its funding surplus. Eastman Kodak Co. also made news earlier this year when it announced that it would shutter its investment office due to its funding surplus and outsource the management of its pension assets.

According to Milliman’s study, an estimated34 corporate plans have frozen their plan assets as of the end of calendar year 2023.

“With the funded status gains seen in the first quarter of 2024, we could see some plan sponsors follow IBM’s lead in reopening their frozen defined benefit plans,” said Zorast Wadia, principal and consulting actuary, in the study.

“Nearly half of the companies in our study are boasting funding surpluses, and about 35 of them have frozen U.S. pension plans with surplus funding as of FY2023,” he said. “If these companies followed IBM’s lead and shifted their retirement spending strategies, it could free up $37.7 billion for shareholder or other business initiatives.”

The Largest Corporate DB Plans

The total value of DB pension plan assets among the 100 largest U.S. plans at the end of 2023 reached $1.32 trillion, according to Milliman. The plan with the most assets was Ford, which had $54.4 billion in assets. IBM was second, with $53.5 billion. General Motors came in third with $52.1 billion. The top five is rounded out by RTX Corp., Boeing, and UPS, which each had assets of $48.9 billion, $48.9 billion, and $45.4 billion, respectively.

The smallest five plans on the list are United Airlines, Edison International, Target Corp., DTE Energy and AIG, with $3.6 billion, $3.6 billion, $3.7 billion, $4 billion, and $4 billion in assets, respectively.

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