The funded status of corporate defined benefit pension plans ended 2013 with the best single-year improvement in 15 years, according to reports from Mercer and Towers Watson.
The funded status of S&P 1500 company pension plans, as studied by Mercer, improved two percentage points to 95% in December and is up 21 percentage points for the year. Towers Watson estimates 418 Fortune 1000 companies with a fiscal year ended Dec. 31 saw their pension funds improve 16 percentage points to 93%.
Strong investment returns coupled with a surge in the discount rate resulted in easily the best one-year improvement over the last 15 years. It is also the highest year-end number since the plans were 106% funded at the end of 2007, according to Towers Watson.
“It really is (the result of) both pieces moving in the right direction,” said Dave Suchsland, senior retirement consultant at Towers Watson. “Equity exposure impacted the results even more than the rate increase.”