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Laxman Pai, Opalesque Asia: The average funding ratio of 19 U.S. publicly listed corporations with more than $20 billion in global pension fund liabilities totaled 93.8% at the end of 2021, up from 86.2% at the start of the year, said a study.
According to Russell Investments' annual analysis of 19 publicly listed U.S. corporations with more than $20 billion in pension liabilities, the impressive increase in the average funding ratio for the "$20 billion club" was attributed primarily to an increase in the discount rate of about 35 basis points.
Dubbed the $20 billion club, these large plans, which represent nearly 40% of all pension and liability assets of U.S. listed corporations, ultimately benefitted in 2021 from the rare combination of favorable discount rates and investment gains.
The analysis also reveals that funding deficits in dollar terms decreased dramatically from $150.3 billion at year's end 2020 to $65 billion at year's end 2021.
"A rising tide lifts all boats, and the $20 billion club plan sponsors enjoyed a tailwind of both actuarial gains from rising discount rates and investment gains," said Justin Owens, director, Investment Strategy & Solutions at Russell Investments. "The total funding deficit is now less than half what it was one year ago."
Justin added that the $20 billion club has only seen an increase in both calendar-year investment returns and actuarial gains (usually rising discount rates) twice since the Global F...................... To view our full article Click here
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