An estimated 35 companies have frozen US pension plans with excess assets

Milliman, Inc., a premier global consulting and actuarial firm, today released the results of its 2024 Corporate Pension Funding Study (PFS), which analyzes data for the 100 U.S. public companies with the largest defined benefit (DB) pension plans, as of their 2023 fiscal years (FY). The plans in this study represent employers across multiple business sectors, including communications, healthcare, financial services, and others. This marks the 24^th consecutive year in which the report has been published.

Key findings for our 2024 annual study include:

• The PFS funded percentage decreased slightly from 99.4% to 98.5%, primarily due to a 17-basis point decline in discount rates during 2023.
• The PFS deficit rose from $8.5 billion to $19.9 billion, a modest increase compared to years 2008 – 2020 when the funding deficit ranged from $188 billion to $382 billion.
• Nearly half (48) of the plans in our study are funded at 100% or greater; no plans in our study are funded below 75%.
• The average investment return on assets was 7.2%, higher than the average expected assumption of 6.4%. Sixty-two of the Milliman 100 companies exceeded their expected returns in 2023.
• Companies reversed a decades long trend and raised their expected rates of return assumptions on plan assets to an average of 6.4% for FY2023, as compared with 5.8% for FY2022. This is still well below the average expected rate of return assumption of 9.4% back in FY2000.
• Contribution income was at its lowest point since 2001, with the aggregate FY2023 cash contributions for these plans at $16.5 billion.
• Increases to fixed-income allocations and corresponding decreases to equity / other asset classes suggest plan sponsors continue to pursue investment de-risking.

“With the funded status gains seen in the first quarter of 2024, we could see some plan sponsors follow IBM’s lead in reopening their frozen defined benefit plans,” said Zorast Wadia, co-author of the PFS. “Nearly half of the companies in our study are boasting funding surpluses, and about 35 of them have frozen US pension plans with surplus funding as of FY2023 (including IBM). If these companies followed IBM’s lead and shifted their retirement spending strategies, it could free up $37.7 billion for shareholder or other business initiatives.”

To view the complete results of the 2024 Milliman Corporate Pension Funding Study, visit www.milliman.com/pfs. To see Milliman’s full range of annual Pension Funding Studies, go to https://www.milliman.com/en/retirement-and-benefits/pension-funding-studies. To receive regular updates of Milliman’s pension funding analysis, email pensionfunding@milliman.com.

About Milliman

Milliman is among the world's largest providers of actuarial and related products and services. The firm has consulting practices in healthcare, property & casualty insurance, life insurance and financial services, and employee benefits. Founded in 1947, Milliman is an independent firm with offices in major cities around the globe. For further information, visit milliman.com.

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