The top 100 U.S. corporate pension plans in aggregate were overfunded for the second year in a row, with an aggregate funding surplus of $111.1 billion in 2007, based on projected benefit obligations, according to Pensions & Investments’ review of annual reports. In 2006, the surplus was $37.3 billion; in 2005, the top 100 plans were underfunded by $50.6 billion.
Of the top 100 plans based on asset size, 64 had funding surpluses at the end of 2007, a 42.2% increase from 2006. Nine of the top 10 corporate plans reported funding surpluses.
While average returns and employer contributions fell slightly from the previous year, the average discount rate for the top 100 plans increased to 6.26%, up 40 basis points from 2006. Forty-nine of the top 100 plans raised their discount rates by 50 points or more last year.
“We’re still in that period of flotsam and jetsam, but what’s pretty clear is that the environment that we’re living in today is better than it was two years ago,” said Kevin Wagner, retirement practice director in Watson Wyatt Worldwide’s Atlanta office.
In 2002, at the height of the corporate pension funding crisis, the top 100 U.S. corporate pension plans were underfunded by a total of $140.6 billion.
