Fortune 1000 Firms’ Pension Plan Funding Falls to 78% in 2011

Fueled by slumping interest rates that inflate the value of pension plan liabilities, the funded status of defined benefit plans sponsored by Fortune 1000 companies slumped in 2011, reversing two years of increases, according to an analysis released March 6.

The aggregate funding level of 422 pension plans offered by Fortune 1000 companies fell to 78 percent in 2011, down from 84 percent in 2010 and 81 percent in 2009, according to the Towers Watson & Co. analysis.

“Employers’ sizable cash contributions to their plans could not counteract the effects of lower interest rates and poor stock market results,” Mike Archer, a senior retirement consultant in Towers Watson’s Parsippany, New Jersey, office said in a statement.

In all, plan liabilities shot up 8.5 percent to $1.543 trillion in 2011, while assets increased about 1 percent to $1.193 trillion, Towers Watson said.

Thirty-two percent of employers sponsored plans with funding levels below 70 percent in 2011, up sharply from 21 percent in 2010.

At the same time, just 11 percent of employers had plans that were more than 90 percent funded in 2011, down from 20 percent in 2010.

Other studies have reported similar declines in plan funding in 2011.

Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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