Milliman analysis: Over 40% of largest 100 corporate pensions are fully funded in 2021

Milliman's 2022 Pension Funding Study shows contributions decreased in FY 2021 while discount rates rose 32 basis points

SEATTLE, April 28, 2022 /PRNewswire/ -- Milliman, Inc., a premier global consulting and actuarial firm, today released the results of its 2022 Corporate Pension Funding Study (PFS), which analyzes the 100 largest U.S. corporate pension plans. The plans in this study represent employers across multiple business sectors, including communications, healthcare, financial services, industrials, energy, technology, utilities, and others. This marks the 22^nd consecutive year in which the report has been published.

The Milliman 100 plans ended their 2021 fiscal years with a funded percentage of 96.3%, up from 88.1% the year prior. In fact, 41 of the 100 plans had a funded ratio of at least 100% at their fiscal year-end, compared to just 18 plans the year prior, and all but one plan in our study saw a measurable funding improvement. The march toward full funding combined with pension legislation has had a number of knock-on effects for these pensions and their sponsors.

"One revelation from our study is that plan sponsor contributions were significantly down in 2021, at the lowest levels we've seen in some time and barely one-third of what they were in 2017 and 2018," said Zorast Wadia, a principal at Milliman and co-author of the PFS. "The funding relief provided by the American Rescue Plan Act clearly drove plan sponsors to make different decisions about cash allocation than they have in the past."

"Additionally," Wadia added, "we're seeing a continued push toward fixed income asset allocations and return expectations that have dropped by over a full percentage point in the past five years. Pension risk management remains a key focus for these companies as they look for ways to reduce volatility as they near or pass full funding."

Other key highlights from the study include:

• Discount rates rose a cumulative 32 basis points, while assets for these plans experienced an annual return of 8.4% - the third consecutive year of better-than-expected investment returns.
• The pension deficit for the Milliman 100 plans decreased from $236.5 billion to $68.3 billion.
• The FY2021 net periodic pension cost flipped to an income statement credit of $20.2 billion (a $38.3 billion improvement compared to the year prior).

To view the complete 2022 Milliman Corporate Pension Funding Study, go to 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, contact us at [email protected].

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.

SOURCE Milliman, Inc.