Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. Print
March 07, 2016 12:00 AM

U.S. companies set to contribute $15.6 billion to pension funds

Rob Kozlowski
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Kevin Haislip
    Alan Glickstein believes some companies are contributing more than necessary to their pension funds to avoid ever-increasing fees imposed by the PBGC.

    U.S. corporations tracked by Pensions & Investments so far in 2016 revealed plans to contribute a total of $15.6 billion to their pension funds, 10-K filings with the Securities and Exchange Commission said.

    Of the 31 companies that plan to contribute at least $100 million in 2016 whose 10-K filings are tracked by P&I, four reported the intent to contribute at least $1 billion each.

    At this time last year, 51 companies had announced they intended to contribute $17.35 billion to their plans in 2015. Of that, 35 companies were planning to contribute at least $100 million to their U.S. plans, totaling $11.6 billion.

    General Motors Co., Detroit, which has the largest U.S. corporate pension plan, will make the largest contribution. In its 10-K filing, the company disclosed plans to put $2 billion into its U.S. hourly pension funds by the middle of the year. General Motors' funding ratio increased 40 basis points to 87.9% from 87.5% in 2014. It will also contribute $947 million to its non-U.S. plans.

    Ford Motor Co., Dearborn, Mich., plans to contribute $1.5 billion to its global defined benefit funds in 2016. The funding ratio for Ford's global DB plans improved to 89% at the end of 2015 from 87.8% the previous year.

    Ford made the announcement on Jan. 7, the same day it said it would be moving to a mark-to-market accounting system.

    Largest pension fund contributions for 2016

    Announced or completed, ranked by size of contribution. Funding ratios are as of Dec. 31, 2015.

    Company2016 contribution2015 funding ratio2014 funding ratio

    General Motors (U.S.)$2 billion87.9%87.5%
    Ford$1.5 billion189.0%87.8%
    UPS$1.16 billion278.4%76.8%
    Delta Air Lines$1 billion45.4%42.8%
    General Motors (non-U.S.)$947 million54.7%52.6%
    General Electric$930 million380.3%79.5%
    Chevron$900 million476.1%76.6%
    AT&T$735 million76.0%75.8%
    Dow Chemical$620 million72.5%70.2%
    Verizon Communications$600 million73.2%73.3%
    Abbott Laboratories$576 million186.6%80.1%
    Consolidated Edison$507 million81.8%76.2%
    FirstEnergy$381 million58.8%62.9%
    PG&E$327 million84.3%85.1%
    Reynolds American$335 million579.4%83.1%
    Kraft Heinz$345 million698.1%115.8%
    Exelon$271 million780.8%81.5%
    DuPont$538 million67.1%68.9%
    General Dynamics$200 million68.6%68.6%
    DTE Energy$180 million875.6%73.1%
    Honeywell$160 million996.5%92.6%
    PepsiCo$150 million89.4%91.4%
    Prudential Financial$140 million102.6%103.9%
    Raytheon$140 million74.3%75.9%
    Unisys$139 million176.1%75.3%
    Allstate$129 million1087.3%89.1%
    Xcel Energy$125 million81.0%82.0%
    Philip Morris $113 million179.2%83.2%
    3M $100 million - $200 million188.5%87.9%
    Boeing$100 million76.0%78.0%
    Kimberly-Clark$100 million188.6%86.2%
    L-3 Communications$100 million74.0%70.2%

    Notes: 1 Global plans. 2 U.S. plans only. 3 For 'other plans,' from affiliates/acquisitions. 4 $650 million to U.S. plans. 5 Contributed $325 million in January. 6 $315 million to U.S. plans; non-U.S. plans were 118.5% funded in 2015. 7 $230 million to U.S. plans, the rest "could" be contribution to other plans. 8 DTE Energy + DTE Electric plans. 9 International plans only. 10 Already contributed in January.

    United Parcel Service Inc., Atlanta, plans to contribute $1.16 billion to its U.S. defined benefit plans in 2016. The company's funding ratio at the end of 2015, 78.4%, was a 160 basis-point improvement over 76.8% the previous year.

    Delta Air Lines Inc., Atlanta, plans to contribute at least $1 billion to its defined benefit plans in 2016. Delta said the contributions will include $500 million above the minimum funding requirements. Delta, which has the worst-funded large corporate pension plan in the nation, did see its funding ratio improve to 45.4% from 42.8% during 2015.

    Overall, the funded status of U.S. corporate pension plans is in pretty good shape, said Alan Glickstein, Dallas-based senior retirement consultant at Willis Towers Watson PLC. The company earlier this year estimated the aggregate funding ratio of the largest corporate pension plans was 82% at the end of 2015, unchanged from Dec. 31, 2014.

    “Measured for funding purposes, they're pretty well funded,” Mr. Glickstein said. “The average pension plan is pretty close to fully funded. As you probably know, that's because pension plans for funding purposes use an interest rate that reflects to some degree a 25-year (interest rate) average as opposed to a current rate.”

    Mr. Glickstein added that while some companies may be well funded enough to have relatively small or non-existent minimum funding requirements, they may still wish to make larger contributions to avoid the impact of skyrocketing premiums charged by the Pension Benefit Guaranty Corp.

    “Some plans, even if they feel like the plan is well funded or they feel interest rates might be coming up, (lowering liabilities), they also have a policy to minimize their PBGC premiums,” Mr. Glickstein said.

    PBGC premiums

    PBGC premiums consist of a fixed-rate premium based on the number of people in the plan as well as a variable-rate premium based on underfunding. A federal budget deal in October that extended the debt ceiling until March 2017 resulted in both premiums being raised.

    Variable rate premiums are rising to $30 per $1,000 of underfunding in 2016, eventually rising to $41 per $1,000 by 2019. As recently as 2013, the variable rate was $9 per $1,000 of underfunding. The fixed-rate premium of $64 per participant in 2016 will rise to $80 per participant in 2019. As recently as 2012, it was $35 per participant.

    Fifteen of the 28 plans tracked by P&I saw their funding ratios increase in 2015, while 12 saw their ratios decrease and one remained essentially the same. Not all plans reported solely U.S. numbers and not all would provide U.S. vs. non-U.S. numbers.

    Abbott Laboratories, Abbott Park, Ill., which announced it plans to contribute $576 million to its global DB plans in 2016, had the greatest funding ratio increase in 2015, albeit for its global plans, to 86.6% from 80.1%.

    A report from Russell Investments that looks at the funded status of 20 public U.S. companies with more than $20 billion in pension liabilities said those companies contributed $13.4 billion to their pension funds in 2015, a drop from previous years, while the funded status remained relatively unchanged. n

    Related Articles
    U.S. corporate pension funding continues 2016 slide in February — 3 reports
    OECD countries facing $78 trillion in pension liabilities — Citi report
    Verizon ups 2016 pension contribution to $750 million
    MSCI: North American companies have largest pension funding problem
    Raytheon delivers $500 million discretionary pension plan contribution in fourt…
    Abbott Laboratories cooks up $364 million pension contribution for 2017
    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    Gender diversity is improving on FTSE 350 boards
    Gender diversity is improving on FTSE 350 boards
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    The Institutional Investor's Guide to ESG Investing
    Sponsored Content: The Institutional Investor's Guide to ESG Investing

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    The Future of Infrastructure: Building a Better Tomorrow
    Fulcrum Issues: Equity Returns and Inflation — Choose Your Own Adventure
    What Matters Most in Considering a Private Debt Strategy
    Why pursue direct lending in the core middle market?
    Research for Institutional Money Management
    Are Factors a Thing of the Past?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Defined Contribution East
      • 2023 ESG Investing