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DEFINED BENEFIT

Southern Co., FirstEnergy power up $1.96 billion in pension contributions in 2016

Southern Co., Atlanta, and FirstEnergy Corp., Akron, Ohio, disclosed large 2016 pension contributions in their 10-K filings this week.

Southern Co. contributed a total of $1.076 billion to its pension plan in 2016, the company’s 10-K filing Wednesday with the Securities and Exchange Commission disclosed.

Of that total, $900 million came as a voluntary contribution by “the traditional electric operating companies and certain other subsidiaries” on Dec. 19, the filing said. There is no expected contribution in 2017.

As of Dec. 31, pension plan assets totaled $11.6 billion, while projected benefit obligations totaled $12.4 billion, for a funding ratio of 93.5%, up from 87.6% the previous year, according to the 10-K filing.

Southern Co.’s asset allocation as of Dec. 31 was 40% domestic equity, 31% fixed income, 21% international equity, 5% real estate, 2% private equity and 1% special situations.

FirstEnergy contributed a total of $882 million to its pension plans in 2016, the company disclosed in its 10-K on Tuesday.

The amount exceeded the minimum funding requirement of $382 million for the year by $500 million, the latter amount of which the company contributed in the form of FirstEnergy common stock in December. FirstEnergy said in the filing that it made the larger contribution to address funding obligations for future years.

In its 10-K filing for 2015, FirstEnergy had said the minimum funding required contributions for 2017 and 2018 were going to be $439 million and $682 million, respectively.

As of Dec. 31, pension plan assets totaled $6.21 billion, while projected benefit obligations totaled $9.43 billion, for a funding ratio of 65.9%, an improvement over the previous year’s funding ratio of 58.8%. The company’s discount rate dropped to 4.25% in 2016 from 4.5% the year before.

The asset allocation as of Dec. 31 was 27% international equity, 20% corporate bonds, 17% domestic equity, 10% real estate, 8% hedge funds, 8% cash and short-term securities, 6% high-yield debt, and 2% each government bonds and mortgage-backed securities.