The 20 companies that sponsor the largest corporate defined benefit plans listed in the U.S. felt the wind at their backs for three quarters of 2018. A blend of higher discount rates and strong equity performance led to funded ratio improvements rivaling the 5% increase in 2017. But it was not to be. In Q4 global equities lost 13% in value, a headwind that negated much of the growth in funded ratios, which on average rose slightly from 84.4% to 85.3% during the 2018. The funding deficit in dollar terms fared better as both assets and liabilities fell during the year, and the $157 billion starting deficit dropped to $137 billion, the lowest level since 2013.
$20 billion club: Equity downturn in Q4 nearly overshadows higher discount rates & strong contributions in 2018
How did 2018 fare for the $20 billion club? The group of 20 publicly listed U.S. corporations with pension liabilities in excess of $20 billion offer a window into the trends affecting the wider corporate pension community.