The average funding ratio of 19 U.S. publicly listed corporations with more than $20 billion in global pension fund liabilities totaled 86.2% at the end of 2020, up from 84.9% at the start of the year, according to a report from Russell Investments.
Strong investment returns offset a decrease in the discount rate of more than 70 basis points that brought the total liabilities of the club to more than $1 trillion for the first time, said the report released Tuesday.
Assets for the "$20 billion club" totaled $901.9 billion as of Dec. 31, up 8.6% from the start of the year, and projected benefit obligations totaled $1.05 trillion, up 7.3% from the start of the year.
Contributions by the 19 corporations totaled $19.8 billion for 2020, up from the $11.9 billion the club contributed in 2019, although both years were significantly below the $28.1 billion in contributions recorded in 2018 and the $37.5 billion in contributions in 2017.
The report predicts contributions among the 19 corporations in 2021 will likely total between $5 billion and $6 billion, the lowest total in over 15 years. It shows corporate plan sponsors are hesitant to make large discretionary contributions given the uncertain state of the COVID-19 pandemic, the report said.
"Contributions in 2020 exceeded expectations, but so far in 2021 no member of the $20 billion club has committed to discretionary contributions, which hasn't happened in the 16 years we've tracked this data," said Justin Owens, director of investment strategy and solutions at Russell, in a news release regarding the report.