Conning’s Corporate Pension Annual Review: 2023 – A Year of Continued De-Risking
April 17, 2024
Conning releases its 2023 annual pension plans review looking into the current state of Corporate Pension Plans in the U.S.
HARTFORD, CT – April 17, 2024 – Conning’s Annual Corporate Pension Review found that at the end of 2023, the average corporate DB pension plan’s funded status was 97.9%, essentially flat from 98.1% at year-end 2022. This annual review analyzes the financial health of the U.S. corporate defined benefit industry through the analysis of 492 U.S. corporate DB (defined benefit) plans that provided data from the end of 2019 to the end of 2023. In addition, the report examines key pension metrics by plan asset size and corporate sectors to understand the potential impact of business size and focus.
In overall terms, DB plan sponsors had a relatively steady year when it comes to funding status and financial metrics. This supported an environment where DB plans could de-risk liabilities through PRTs (pension risk transfers). In 2023, DB plan assets slightly decreased, primarily due to lower plan contributions but plan liabilities also decreased due to the combination of increased discount rates and PRTs. In combination, those factors contributed to the maintenance of the relatively high funding status as plan assets continued to shift towards fixed income securities.
“The economic environment, regulatory changes, and corporate financial health played a major role in shaping the corporate DB pension plans landscape in 2023. DB plan sponsors continued to respond to the complex interplay amongst those factors. For many plan sponsors, PRTs became a viable solution to de-risk liabilities,” said Scott Hawkins, Managing Director and Head of Insurance Research at Conning.
The increase in interest rates continued to maintain relatively high discount rates. Those higher rates helped reduce 2023 year-end DB plan liabilities, albeit by less than 1% from year-end 2022.
“Interest rates have a profound impact on the funding status of pension plans. Higher interest rates drive higher discount rates. Higher discount rates can reduce the present value of future pension liabilities, potentially improving the funding status of the plans,” said Manu Mazumdar, a Director at Conning Insurance Research and co-author of the report.
“Conning’s Corporate Pension Review – A Year of Continued De-Risking” is available for purchase from Conning by calling (888) 707-1177 or by visiting here.
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Conning (www.conning.com) is a leading investment management firm with a long history of serving the insurance industry. Conning supports institutional investors, including insurers and pension plans, with investment solutions, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America.
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