U.S. corporate pension plans continue to lower their pension contributions as a strong market and accelerated pension contributions in the past have kept funding levels healthy despite the effects of the COVID-19 pandemic.
U.S. corporations plan to contribute a total of slightly less than $15 billion to their global pension plans in 2021, according to Pensions & Investments' analysis of S&P 500 companies that announced contributions of at least $100 million.
The total is significantly lower than in past years, thanks to strong investment returns that have improved funding ratios significantly as well as accelerated discretionary contributions made since 2017 that have fulfilled minimum required contributions for multiple years.
The data reflect S&P 500 companies' expected contributions disclosed in their 10-K filings with the Securities and Exchange Commission between Jan. 28 and March 4, before single-employer pension funding relief was adopted in the American Rescue Plan Act of 2021 that may lower minimum required contributions.
The 42 companies tracked said they planned to make a total of $14.9 billion in contributions to their global pension plans in 2021, according to their 10-K filings. Those same companies said they contributed a total of $14 billion to the plans in 2020. The 52 companies P&I tracked one year ago said they expected to contribute a total of $21 billion to their plans in 2020.
Five companies that expect to make no or little contributions this year made contributions totaling $8.7 billion last year, reported in 2021, well above the combined $1.63 billion those companies had said they planned to contribute for the year.
Only three companies announced plans to contribute at least $1 billion to their plans in 2021.
Chevron Corp., San Ramon, Calif., plans to contribute $1.1 billion to its U.S. plans and $200 million to its non-U.S. plans in 2021; Lockheed Martin Corp., Bethesda, Md., plans to contribute $1 billion to its global plans; and Dow Inc., Midland, Mich., also plans to contribute at least $1 billion, specifically to its U.S. plans. In the latter case, Dow announced all these contributions are going to the chemical company's U.S. plans in an 8-K filing on March 4 that also said it will freeze the benefit accruals of those plans at the end of 2023 and increase the matching contributions in its 401(k) plan.
Dow originally announced it planned to contribute the minimum required $300 million to its global pension plans during the year in its 10-K filing with the SEC on Feb. 5.