Pension plans at large firms now at greatest health since 2008

Pension plans at large American companies have reached their healthiest point since the onset of the 2008 financial crisis, according to data from consulting firm Milliman as reported by CNBC.

Driven by strong bond yields and high returns on stocks, the 100 largest pensions among publicly-traded U.S. companies were almost 100% funded by the end of 2021. This is the healthiest such funds been since September 2008, the beginning of the financial crisis that led to the Great Recession according to the consultancy.

“A pension’s ‘funded’ status is a core gauge of its health,” the CNBC report describes. “It’s a measure of plan assets relative to liabilities (how much money the plan needs to pay future income). Pensions less than 100% funded don’t have enough money on hand to meet future obligations to retirees.”

The largest pension plans in the nation were 99.6% funded by the end of 2021, a nearly 10% increase from their funding positions at the same time in 2020, the firm noted.

“The story is similar among a broader pool of big companies in the Fortune 1000. Their pensions were 96% funded, on average, last year, according to Willis Towers Watson, a consulting firm,” the CNBC report reads. “That’s the highest level since the end of 2007 and up ‘sharply’ from 88% in 2020, according to its analysis.”

This will allow for some relief for retirees who expect to live in retirement on their pensions, according to experts who shared their perspectives with the outlet.

“The pensioner will have a higher degree of comfort there’s something to back the promise,” said Philip Chao, retirement plan consultant at Experiential Wealth, based in Cabin John, Md.

While this will likely be reassuring news for the many Americans who work at large companies, the general availability of pension plans has declined significantly over the past 50 years. According to data from the U.S. Bureau of Labor Statistics, private-sector pension participation stood at less than 10% in 2020 after reaching a peak of nearly 50% prior to 1974.

Read the Milliman data and the CNBC report.

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