An article in CFO Magazine outlines the status of pension plans in Fortune 1000 companies. By the end of 2015, there was not a change in the pension plan funded status of the U.S. corporate plan sponsors. According to a new survey, it is hypothesized that most likely a rise in interest rates helped to offset weak global stock markets.
The aggregate pension funded status was 82% in both 2014 and 2015 according to Towers Watson. The pension deficit was $319 billion in 2014 and $291 billion in 2015. 2012 and 2013 were more volatile. Pension plan assets declined by 6% in 2015. Overall from 2014 to 2015 pension obligations declined alongside plan assets – resulting in essentially nothing changing from the prior year.
Alan Glickstein, a senior retirement consultant from Towers Watson, was quoted saying, “An increase in corporate bond rates in advance of the Fed’s recent interest rate decision, combined with a flat global stock market, contributed to keeping pension plans in roughly the same financial shape as the previous year… pension obligations and assets declined…If the Fed’s decision to raise short-term interests rates is the first move in a pattern of rising rates, generally we could see improved pension funded status in the coming year, depending on the course on how the stock market responds”.