Higher corporate bond rates combined with a lackluster global stock market left corporate pension plans in 2015 funded at about the same level as in 2014.
A Towers Watson analysis released today estimated that the aggregate pension funded status was 82 percent at the end of 2015, the same level as 2014.
The pension deficit lessened slightly to $291 billion from $319 billion at the end of 2014. “While pension obligation declined last year, so did assets,” Towers Watson senior retirement consultant Alan Glickstein said in a statement.
Related: Market losses, low yields sideswipe U.S. corporate pensions
Corporate pension plans haven’t been fully funded since 2007. Finding levels hit a low of 77 percent in 2012 but have been rising since then. If the Fed continues to increase interest rates, pension funding could improve this year.
Total pension plan assets in 2015 fell 6 percent to $1.33 trillion. Towers Watson estimates that companies put $32 billion into pension plans, enough to cover new benefits earned by employees through the year but not enough to reduce the overall funding deficit.
In recent years employers have made other moves to lower their pension-related risks, such as lump-sum buyouts and group annuity purchases. They’re also increasingly replacing pension plans altogether with defined-contribution plans such as 401(k)s in which employees bear more responsibility to save for their own retirement.
In 2013, less than a quarter of Fortune 500 companies offered defined-benefit plans to new workers, a 60 percent decline from 15 years ago, according to Towers Watson.
