2016 Corporate Pension Funding Study
7 April 2016
2016 Corporate Pension Funding Study
The 100 largest corporate defined benefit pension plans made little progress in 2015, a tumultuous year that buffeted pension plans with volatile markets and interest rate movement. The 2015 investment return was only 0.9%, but the year-end funded ratio increased slightly to 81.8% from 81.7% a year ago due to a 25 basis point increase in discount rates and an update to life expectancy assumptions. The pension funding deficit declined by $19 billion, settling at $307 billion at the end of 2015. Pension expense in 2015 declined $3.6 billion to $33.7 billion from $37.3 billion in 2014. The two most adverse effects on the funded ratio were the result of 2015 capital market experience and lower-than-expected employer contributions. Additionally, in somewhat of a surprise, there was the disclosure that 37 of the largest 100 plan sponsor companies will record fiscal year 2016 pension expense using an accounting calculation method change linked to the spot interest rates derived from yield curves of high quality corporate bonds.