The funded status of 19 U.S. publicly listed corporations with more than $21 billion in pension fund liabilities was an aggregate 79.06% at the end of 2016, down slightly from 79.93% at the start of the year, said Russell Investments' annual report released Wednesday.
The collective deficit for the 19 companies with the largest global pension liabilities was $189 billion at the end of 2016, up $12 billion from the start of 2016.
The companies, which Russell refers to as the “$20 billion club,” had $713 billion and $901.8 billion in combined assets and liabilities, respectively, at the end of the year, up 1.29% and 2.1% from the start of the year.
Driving the overall funding decline was a roughly 30-basis-point-drop in the median discount rate over the year to 4.1%, the report said.
The impact of the discount rate drop was slightly offset by investment returns slightly above expectations and employer contributions slightly above the cost of new benefit accruals.
Investment returns for the 18 companies that report on a calendar-year basis ranged from 4.7% to 12% in 2016. The report did not specify individual company returns. Contribution activity was mixed, with 13 companies exceeding their 2015 contributions and the remainder contributing less. About half of the analyzed companies made discretionary U.S. pension contributions in 2016 and half did not. Employer contributions of the 19 companies totaled $18.2 billion in 2016.
The number of companies analyzed in 2016 is down from 20 in 2015. Those 20 companies contributed $13.4 billion to their plans that year. Hewlett-Packard was excluded from this year’s report because of its 2015 separation into two different companies — HP Inc. and Hewlett Packard Enterprise Co. As a result, Hewlett-Packard’s legacy plan with $33 billion in liabilities was separated into an HP Inc. plan with roughly $13 billion in liabilities, and a Hewlett Packard Enterprise plan with roughly $20 billion in liabilities, most of which lies outside of the U.S.
Instead, future updates will include 3M Co., which had $23 billion in liabilities at the end of 2016.
The 19 companies which make up the $20 billion club and are analyzed in this year's report are: AT&T Inc., Boeing Co., Dow Chemical Co., E.I. du Pont de Nemours & Co, Exxon Mobil Corp., Federal Express Corp., Ford Motor Co., General Electric Co., General Motors Co., Honeywell International Inc., International Business Machines Corp., Johnson & Johnson, Lockheed Martin Corp., Northrop Grumman Corp., Pfizer Inc., Raytheon Co., United Parcel Service Inc., United Technologies Corp. and Verizon Communications Inc.