Lockheed Martin to contribute $5 billion to pension funds in 2018

Lockheed Martin Corp., Bethesda, Md., expects to contribute $5 billion to its U.S. defined benefit plans in 2018, including required and discretionary contributions.

"The corporation expects the net 2018 FAS/CAS (as calculated by federal accounting and government contracting standards) pension benefit to be approximately $1 billion, assuming a 3.625% discount rate," a 50-basis-point decrease from the end of 2016, the company said in its latest 8-K filing Monday.

Lockheed doesn't expect to have to make any further pension contributions until 2021, according to the filing. It announced in October that it had planned to contribute $1.6 billion to pension plans in 2018.

Pension plan assets returned approximately 13% in 2017, a 550-basis-point increase from the expected rate of return at the end of 2016. Going forward, Lockheed Martin expects to earn 7.5% over the long term. It revised its longevity assumptions based on updates from the Society of Actuaries in the fourth quarter of 2017.

As of Dec. 31, 2016, Lockheed's DB plans had $31.4 billion in assets and $45.1 billion in pension obligations for a funding ratio of 69.6%, according to its 10-K filing.

As of Sept. 30, the company had $32.54 billion in U.S. defined benefit assets, according to Pensions & Investments data. The asset allocation as of that date was 26.4% domestic equity, 22.1% domestic fixed income, 17.2% international equity, 10.5% private equity, 5.7% real estate, 3% cash and 15.1% in other alternatives.