S&P 500 companies improved the aggregate funded status of their defined benefit pension plans in 2010 to 83.9%, from 81.7% a year earlier, but they remain underfunded by $245 billion, compared to $261 billion a year earlier, according an S&P report.
Pension assets totaled $1.273 trillion in 2010, with obligations of $1.518 trillion.
Estimated returns rates for the plans also declined for the 10th consecutive year to 7.73% in 2010, down from 7.83% in 2009. Howard Silverblatt, S&P senior index analyst and author of the report, said in a telephone interview that of the 333 companies that offer defined benefit pension plans, 26 were fully funded and 307 were underfunded, compared to 18 fully funded and 322 underfunded of the 340 firms in 2009.
Mr. Silverblatt said the record recovery in 2010 has put companies in better financial shape to address pension funding.
“The S&P 500 companies are doing very well,” he said. “They have good cash flow and they want to grow.”
The report, “S&P 500 2010: Pensions and Other Post Employment Benefits” also shows that companies set aside an aggregate $1.34 trillion through 2010 to fund pension costs and OPEBs, while obligations totaled $1.79 trillion.