U.S. corporations plan to contribute more than $26.8 billion to their pension funds this year, according to an analysis by Pensions & Investments tracking 10-K filings with the Securities and Exchange Commission of companies that said they would contribute $100 million or more.
Among these 64 companies, seven said they would contribute at least $1 billion each, based on 10-K filings through March 1. The P&I review covers 85% of S&P 500 companies that have filed 10-K statements.
United Parcel Service Inc., Atlanta, promised the most money at $2.3 billion for U.S. defined benefit plans vs. $2.5 billion in 2016. The funding ratio was 76% as of Dec. 31, down from 78.4% a year earlier.
FedEx Corp., Memphis, Tenn., said it will contribute $2 billion to U.S. plans during the fiscal year that began June 1, 2016. FedEx's contribution is noteworthy because the company said $1 billion of that planned contribution will come from a $1.2 billion bond offering.
The company made $726 million in pension contributions during the fiscal year that ended May 31, 2016. The funding ratio was 83.6% as of May 31, 2016, vs. 85.4% a year earlier.
The third-biggest contributor is General Electric Co., Boston, which will inject $1.72 billion into the GE Pension Plan this year. The company contributed $330 million in 2016. The funding ratio at the end of 2016 was 64.2%, down from 66.5% as of Dec. 31, 2015.
With few exceptions, every company's U.S. pension plan tracked by P&I reported a decline in their discount rates, which measure projected pension obligations, between 2015 and 2016.
The median discount rate for U.S. pension plans was 4.2% in 2016, compared with 4.5% in 2015. Three companies provided the discount rate as a range and were not included in the median calculations.
Pension experts said declining discount rates are no surprise because they reflect declining interest rates.
The median funding ratio in 2016 for the P&I sample was 81.1%, compared with 80.2% in 2015. Among these plans, 34 had lower funding ratios in 2016 vs. 2015, 28 plans had a higher ratio, and two were unchanged.