Funding levels for U.S. defined benefit plans, especially corporate plans, have improved steadily over the past three years, and most sponsors - 96% - say they will leave their pension plans open to current and new employees over the coming five to 10 years, according to research sponsored by Fidelity Management Trust.
The percentage of plans that were 91% to 99% funded rose to more than 25% in 2004, up from 13% in 2002, said FMTC President and CEO Drew E. Lawton in a press release. Corporate plans were in especially good shape, with the average plan fully funded "on an accumulated benefit obligation basis" during 2004. The percentage of overfunded corporate plans rose to 32% in 2004 from 21% in 2002, while the percentage of underfunded plans dropped to 50% from 69%, the survey showed.
Between April and June, Fidelity Investments surveyed officials of 189 companies that have pension plans with more than $200 million in assets.
Mr. Lawton said in a telephone interview that the results offer some counterweight to the popular image that the constituency among plan sponsors for DB plans is fast crumbling. Overall, "a lot of funding progress" has taken place, helped by stronger markets, stabilizing interest rates and contributions to plans, he said.