U.S. Single Employer Pension Plan Contribution Indices, 2009–2014

This study expands on the SOA’s June 2016 study of single employer plan contribution indices in the U.S. and updates results through 2014. Study highlights include:

  • Using smoothed assets as allowed and the smoothed bond rates required by current law to discount the liability, the 2014 total funding target liability of $1.9 trillion was 98% funded, with an unfunded liability of $30 billion.1 Based on unsmoothed high-quality corporate bond rates and the market value of assets, the estimated liability of $2.4 trillion was 91% funded with an unfunded liability of $218 billion.
  • Weighted by plan liabilities, more than 99% of the single employer system contributed at least the minimum amount required by law for both 2013 and 2014. Preliminary data for 2015 indicate results similar to 2014.
    • Based on smoothed rates for 2014, about 8% of the system contributed at least enough to maintain their unfunded liability and 3% fell short of that benchmark, while 89% had no unfunded liability. Corresponding 2013 percentages were 18%, 4% and 78%, respectively. Fewer plans met the benchmark in 2014 than 2013 because fewer plans had an unfunded liability in 2014. The portion of the system that failed to maintain their unfunded liabilities remained essentially flat.
    • For 2014, 7% of the system contributed at least enough to close their funding gaps within 7 years, while 4% failed to meet that benchmark. Respective percentages for 2013 were 16% and 6%.
  • Using the lower, unsmoothed rates, more plans had an unfunded liability and fewer plans’ contributions were sufficient to maintain their unfunded liability.
    • For 2014, 28% of the system had no unfunded liability, up from 16% for 2013.
    • About 44% of system’s contributions were insufficient to maintain their unfunded liabilities for 2014, down from 53% for 2013. And 55% of the system contributed less than needed to close their funding gap within 7 years, down from 73% for 2013.

    Report

    U.S. Single Employer Pension Plan Contribution Indices, 2009–2014

    Thank You

    The authors thank the following volunteers for their thoughtful arm’s-length review of this study prior to publication. Any opinions expressed may not reflect their opinions or those of their employers. Any errors belong to the authors alone.

    Daniel S. Atkinson, FSA, EA, MAAA

    Thomas P. Clemens, FSA, EA

    Questions or Comments?

    If you have comments or questions, please email research@soa.org.


    1Funding requirements for single employer pension plans are defined by Internal Revenue Code §430, as amended by the Moving Ahead for Progress in the 21st Century Act, the Highway and Transportation Funding Act of 2014 and the Bipartisan Budget Act of 2015. In the current economic environment, smoothed rates are higher than unsmoothed rates.