Despite strong equity markets, financial health of largest US corporate pension plans showed modest improvement in 2024

Core Insights - The funded status of the largest corporate defined benefit pension plans in the U.S. improved modestly to 100% in 2024, up from 98% in 2023, despite strong equity market gains and rising long-term interest rates [1][2] Group 1: Funded Status and Financial Health - The aggregate pension funded status for 361 Fortune 1000 companies at the end of 2024 is estimated at 100%, a slight increase of 2 percentage points from 98% at the end of 2023 [2] - Pension obligations decreased from $1.25 trillion at the end of 2023 to an estimated $1.12 trillion at the end of 2024, attributed to higher interest rates and pension risk transfer activities [2] Group 2: Investment Performance - Pension plan assets declined by 8% in 2024, finishing the year at $1.12 trillion, with overall investment returns averaging 3% [4] - Domestic large-cap equities increased by 25%, while small/mid-cap equities rose by 12%, contrasting with losses of 2% and 6% for long corporate and long government bonds, respectively [4] Group 3: Future Considerations for Plan Sponsors - Sponsors of underfunded plans are advised to explore cost management and cash contribution strategies, including investment strategy and de-risking initiatives [5] - For well-funded plans, sponsors should consider how to protect assets and utilize surplus for employee benefits in the upcoming year [5]