Unfunded pension liabilities of the 100 largest corporate plans fell a whopping 41% in 2003, thanks to a 72% increase in employer contributions and the recovering stock market, Pensions & Investments' review of annual reports reveals.
In 2003, the largest corporate pension plans were underfunded by $88.7 billion, down from $151 billion in 2002 and about $108 billion in 2001.
Employer contributions soared to $51.5 billion in 2003, from $30 billion in 2002. In 2001, employer contributions to the largest DB plans totaled a paltry $8 billion.
Investment returns, meanwhile, jumped to a combined $150.7 billion in 2003, compared with a loss of $76.6 billion in 2002 and a loss of $72.4 billion in 2001. General Mills Inc., Minneapolis, was the only company reporting a negative return last year; its pension plan lost $6 million in 2003.
In 2002, only three of the 100 companies reviewed reported positive returns.
Nine corporations contributed more than $1 billion each to their plans last year: General Motors Corp., Detroit; Ford Motor Co., Dearborn, Mich.; Exxon Mobil Corp., Irving, Texas; Boeing Co., Chicago; DaimlerChrysler Corp., Auburn Hills, Mich.; Pfizer Inc., New York; ChevronTexaco Corp., San Ramon, Calif.; Federal Express Corp., Memphis, Tenn.; and United Technologies Corp., Hartford, Conn. Each exceeded the contribution required by the Pension Benefit Guaranty Corp.
"I think there's a variety of reasons that companies choose to contribute more than what's required. It's certainly something we're seeing more clients consider. They want to be able to able to tell their employees that they're doing the responsible thing," said Mike Pollack, a principal in the Stamford, Conn., office of Towers Perrin.