For the first time in 17 years, at the close of 2024 pension plans sponsored by large U.S. companies were fully funded to meet future financial obligations.

That’s according to Willis Towers Watson’s latest funded-status analysis, which examined pension plan data for 361 Fortune 1000 companies with a calendar fiscal year. The analysis estimated that, in the aggregate, those companies’ plans were 100% funded.

The companies’ combined pension obligations declined by 8%, from an estimated $1.25 trillion at the end of 2023 to an estimated $1.12 trillion a year later, buoyed by higher interest rates and continued pension-risk-transfer activity by plan sponsors.

Back in late 2007, when most companies were not yet affected by the burgeoning financial crisis, WTW estimated the funding level at a bountiful 107%. Then followed a long 13 years of funding percentages wallowing in the 70s and 80s. The situation has markedly improved since 2021, culminating in the now fully funded status.

“For the first time since before the 2008 financial crisis, more companies are trying to figure out what to do with a potential surplus in their pension plan than worrying about pension deficits and resulting cash flow needs,” said Joseph Gamzon, managing director of retirement for WTW.

“This is a shift away from the pension struggles many sponsors have experienced over the last 17 years,” Gamzon added.

Still, considering last year’s considerable stock market gains, the advancement funded-status level was rather modest, ticking up just two percentage points from the 2023 level of 98%.

A strong equity-market performance amid rising interest rates traditionally would exert more influence on pension plans’ overall financial health, Gamzon noted. “However,” he said, “plan assets are less concentrated on equity investments today, as they hold more bonds to support liability-hedging strategies to provide funded-status stability.”

Companies also contributed less cash to their plans in 2024 than historical norms, according to WTW.

Overall investment returns for corporate pension plans averaged 3% in 2024, WTW estimated, although returns varied significantly by asset class. Domestic large-cap equities increased by 25%, and domestic small/mid-cap equities by 12%. On the other hand, long corporate and long government bonds, typically used in liability-driven investing strategies, realized losses of -2% and -6%, respectively.

Meanwhile, the aggregate 100% funding level does not mean, of course, that every plan sponsor is fully funded.

“As we move into 2025, sponsors whose plans aren’t fully funded will want to keep an eye out for opportunities to manage costs and cash contributions, including investment strategy and de-risking initiatives,” said Fred Lamm, managing director of retirement for WTW.

Sponsors with well-funded plans “will want to think about how best to protect this asset and best utilize the surplus for employee benefits in the coming year,” Lamm said.

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