Pension Plan Funded Status on the Upswing

Thanks to higher interest rates and higher stock prices, plan funded status improved dramatically in 2013—although it's still below 100 percent.

In 2013, as rising stock prices increased asset values and rising interest rates lowered liabilities, the funded status improved substantially for pension plans from the nation’s largest companies. After analyzing the financials of the 418 Fortune 1000 companies that have a December fiscal year-end and sponsor a U.S. tax-qualified defined-benefit pension plan, Towers Watson estimates that the funded status of these plans, on average, was 93 percent at the end of last year. That’s up 16 percentage points from the 77 percent funding ratio a year earlier (see Figure 1, below).

As a result, plan sponsors’ contributions to their pensions fell last year. Towers Watson estimates that the companies in its analysis contributed $48.8 billion to their plans in 2013, which is 23 percent less than in 2012.


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