Tags: pension | fund 2014 | plan

Towers Watson: Private Pension Funding Fell in 2014

By    |   Friday, 09 January 2015 10:21 AM

Plenty of studies have showed the weakness of state and local pension systems, and now one from consulting firm Towers Watson shows potential problems for corporate pension funds as well.

In a study of 411 Fortune 1000 companies, it found that on aggregate their pension plans were 80 percent funded at the end of last year, dropping from 89 percent at the end of 2013.

The aggregate pension deficit widened by more than 100 percent in 2014 to $343 billion, as pension plan funding slid by $181 billion last year.

"Despite a rising stock market in 2014, funding levels for employer-sponsored pension plans dropped back to what we experienced just after the financial crisis," Alan Glickstein, a senior retirement consultant at Towers Watson, said in a statement.

"A one-time strengthening of mortality assumptions is responsible for about 40 percent of the increased deficit. We also found that plan sponsors that used liability-driven investing strategies in 2014 had better results, as the declining discount rates were matched with very strong returns for long corporate and Treasury bonds."

As for public pensions, a report issued last year by the Rockefeller Institute of Government detailed their problems. "Bad incentives and inadequate rules allowed public sector pension underfunding to develop," the study says.

"They mask the true costs of pension benefits and encourage underfunding, under-contributing, and excessive risk taking, trapping pension administrators and government funders in potentially destructive myths and misunderstanding."

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Plenty of studies have showed the weakness of state and local pension systems, and now one from consulting firm Towers Watson shows potential problems for corporate pension funds as well.
pension, fund 2014, plan
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2015-21-09
Friday, 09 January 2015 10:21 AM
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