LONDON — U.S. corporate pension plans are four times more likely to be fully funded than those in the United Kingdom, according to research by Aon Consulting.
Twenty percent of U.S. corporate plans studied were fully funded at the end of 2004, compared with only 5% of U.K. corporate plans. U.S. plans overall were 91% funded as of Dec. 31, based on Financial Accounting Standard 87. U.K. corporate plans were 85% funded as of the same date, using Financial Reporting Standard 17 accounting assumptions.
"Twenty percent is certainly not as high as you would have seen five years ago," said Brad Klinck, a senior vice president with Aon Consulting in Somerset, N.J.
The research cited a disparity in contributions as one of the main reasons U.S. plans are better funded. Cash contributions of more than 10% of plan assets were made by U.S. firms during the past two years, compared with 7% for U.K. firms.
"A fair number of (U.S.) companies contributed far more" than required, Mr. Klinck said, noting "a lot of employers want to do the right thing." However, he said, future legislation will have a large impact on how many U.S. plans are fully funded in the coming years.