The 2020 edition of the Milliman Corporate Pension Funding
Study (PFS) is our 20th annual analysis of the financial
disclosures of the 100 U.S. public companies sponsoring
the largest defined benefit (DB) pension plans. These 100
companies are ranked highest to lowest by the value of their
pension assets reported to the public as of the end of fiscal year
2019, to shareholders, and to the U.S. federal agencies that have
an interest in such disclosures.
Looking back to 2019 in April 2020 may seem irrelevant as we
are dealing with the global pandemic’s horror and destruction
to the health, jobs, businesses, and financial assets of everyone.
Congress has enacted the CARES Act that has implications
for decisions employers can or will make on managing these
pension plans. CARES also enacts many changes to defined
contribution plans which could result in declining account
balances for hardship distributions, loans, and investment
losses. We respectfully keep this in mind as we recap pension
funding in 2019.
FIGURE 1: DISTRIBUTION BY FUNDED RATIO
Despite a drop of 94 basis points in discount rates, the private
single-employer defined benefit plans of the Milliman 100
companies continued to make funding progress in 2019 due
to their stellar investment returns of 17.3%. The year-end 2019
funded ratio for the Milliman 100 companies settled at 87.5%, a
slight improvement from the year-end 2018 funded ratio of 87.1%.
Fourteen plans had a funded ratio of at least 100% compared to
16 plans from the 2019 Milliman PFS. However, due to a matching
11% growth in both assets and liabilities, the funding deficit grew
by $17 billion, ending the year at $232 billion.
Contributions of $34.0 billion in 2019 were lower than expected,
after two years of record high contributions ($59.5 billion in 2018
and $61.8 billion in 2017). Thirteen employers contributed at least
$1 billion in 2019, similar to 2018. 2019’s largest contribution was
by United Parcel Service, Inc. ($2.1 billion); compared to 2018
when six employers made larger contributions, the highest being
AT&T’s $9.3 billion.
After a disappointing 2018 investment loss of 2.8%, the
financial markets rebounded in 2019 permitting these
pensions to post a 17.3% investment return. It was the second
best year in the history of the study (exceeded only by the
19.5% return earned in 2003). The strong investment return
in 2019 increased plan assets by $243 billion compared to the
expectation that investments would only add $94 billion,
based on the companies’ long-term investment return
assumptions. The Milliman 100 plans’ assets increased to an
all-time high of $1.62 trillion from $1.45 trillion.
However, this record asset level was offset by soaring liability
values as the average discount rate dropped by 94 basis points
to 3.06% from 4.00%. This is the largest one-year discount
rate decrease in the history of our study; the previous largest
decrease was 79 basis points in 2014. The pension benefit
obligation (PBO) of the Milliman 100 plans increased to a new
all-time high of $1.85 trillion from $1.67 trillion.
Pension expense (the charge to the income statement under
Accounting Standards Codification Subtopic 715) increased to
$26.5 billion in fiscal year (FY) 2019 from $16.2 billion in FY2018.
This reversed the trend in recent years of decreasing expense
charges since the all-time high of $56.2 billion in FY2012.
We noted a modest decline in life expectancy assumptions;
participants and pensioners will not live as long as previously
assumed based on use of the mortality tables published by the
Society of Actuaries. The change in life expectancy assumptions
generally reduced the actuarial present value of the PBO.
During FY2019, pension settlements or pension risk transfer
(PRT) programs continued to be employed as a prudent
financial cost management tool by plan sponsors. Among the
Milliman 100 pension plans, settlement payouts totaled an
estimated $13.5 billion in FY2019; down significantly compared
to the $18.8 billion in FY2018. The general trend downward may
indicate that a majority of the largest U.S. pension plans have
already either considered or engaged in PRT programs and
now the market has shifted toward employers with smaller plan
asset portfolios. The largest settlement in 2019 was $2.7 billion
in lump sums paid by GE to former employees who had not yet
started their pensions.
Like the Milliman 100 pension plans, the PBGC reported a
funding percentage improvement for the corporate pension
plans under its custody in the federal fiscal year ending
September 30, 2019. The PBGC recorded a 107% funded ratio
for the plans that terminated (when the sponsoring employer
filed for Chapter 11 insolvency) and were sent to it as the
receiving custodian. (We note that plans the PBGC expects to
terminate are also included.) This is up from the 102% funded
status reported at September 30, 2018. This change was driven
by a large increase in assets caused by premiums collected and
higher-than-expected investment returns (which exceeded the
increase in liability due to the drop in interest rates). Due to
the increases in the PBGC premium rates as well as increases in
funding deficits in 2018 (as measured on the PBGC’s basis), the
PBGC’s total premium income increased by 15% in FY2019 to
$6.4 billion, up from $5.5 billion.
Six companies were eliminated in 2019 from our study due to
reductions in the market values of pension plan assets or a
delay in releasing financial statements.
- Bristol-Myers Squibb terminated their largest pension plan
in 2019.
- Weyerhauser assets declined due to a $1.5 billion
annuity buyout.
- Baxter International did not release their FY 2019 Form 10-K
in time to be included in the 2020 PFS.
- Target, Parker-Hannifin, and Rockwell Automation asset values
declined enough to drop below the 100th largest company.
Five companies are new to the 2020 Milliman PFS (some of
which returned after falling off in prior years): Kraft-Heinz,
AbbVie, Eaton, Alcoa, and Air Products & Chemicals.
Also of note:
- DowDuPont split into three companies: Dow, DuPont, and
Corteva (Dow and Corteva both retained a large enough share
of DowDuPont’s pension plans to remain in the 2020 study).
- BB&T was renamed Truist as part of its acquisition of
SunTrust Banks.
FIGURE 2: HIGHLIGHTS (FIGURES IN $ BILLIONS)

In addition to defined benefit pension plans, the PFS tracks
the actuarial obligations of postretirement healthcare benefits.
Accumulated postretirement benefit obligations (APBOs) have
been trending downward for the past several years. In FY2019,
APBOs decreased an additional $0.1 billion from their FY2018
level to $171.0 billion, despite the upward pressure on liabilities
due to the large drop in discount rates seen in 2019. This is
consistent with the trend by plan sponsors over the last decade
of divesting other postemployment benefits (OPEB) liabilities.
The investment return on the pension assets was 17.3% when the
expectation was a FY2019 investment return of 6.5%. Based on
this, we estimate that there was a net investment gain of $148.8
billion. This is the largest gain we’ve seen in the history of the
study. Since 2008, pension plan asset allocations to equities
decreased to about 32.5%, from about 43.7%, while fixed income
allocation has increased to about 49.1% from about 41.6%.
Contributions in 2019 were $34.0 billion, down significantly
from 2018’s $59.5 billion. Pension expense in FY2019 increased
by $10.3 billion to $26.5 billion, from $16.2 billion in FY2018.
Detailed comments and illustrations follow in the remainder of
the 2020 PFS. Various tables with historical values can be found
in the Appendix.
Equities and long duration fixed income
both kept pace with liabilities in 2019
With the average discount rate falling by 94 basis points during
2019 for the calendar fiscal year plans, we estimate that their
pension liabilities increased approximately 17% on an economic
basis (due to the passage of time and changes to discount
rates). Plans with significant allocations to fixed income as part
of a liability-driven investment (LDI) strategy typically have allocations to long-duration high-quality bonds. During 2019
these bonds earned returns of 20% or more—closely tracking the
increase in pension liabilities. Surprisingly, equities, especially U.S.
equities, performed even better and also outperformed pension
liabilities. Core fixed income produced strong returns but not
enough to keep up with the liabilities of most plans.
Rates of return earned in 2019 for the 86 companies sponsoring
pension plans with calendar fiscal years ranged from 10.3% to
24.6%, with an average of 18.3%. Returns mostly fell in the 14.0%
to 24.0% range (79 plans), with four plans earning returns below
14.0% and three plans earning returns above 24.0%. Generally, plans
with greater allocations to equities earned higher returns. The 18
plans with equity allocations of at least 50% earned an average
return of 19.6% while the 20 plans with equity allocations below
25% earned an average return of 16.0%. The rate of return earned
by the plan sponsor with the highest allocation to equities (71.9%)
was 23.4%, which was better than the return of 14.1% for the plan
sponsor with the lowest allocation to equities (5.4%) in 2019.
FIGURE 3: ESTIMATED RATES OF RETURN EARNED IN 2019
FOR PLANS BY THEIR ALLOCATION TO EQUITIES
(CALENDAR YEAR FISCAL YEARS ONLY)

FIGURE 4: ESTIMATED RATES OF RETURN EARNED IN 2019 FOR PLANS
BY THEIR ALLOCATION TO FIXED INCOME (CALENDAR YEAR
FISCAL YEARS ONLY)

In prior years, investment allocations made by plan sponsors
had showed a trend toward implementing LDI strategies.
Generally, this involves shifting more assets into fixed income
positions. This trend appears to have continued in 2019 as
equity allocations in the pension portfolios increased slightly
to an average of 32.5% during 2019, up from 32.1% at the end of
2018 (although this may just be due to surging equity prices
as opposed to strategic allocation shifts). The percentage of
pension fund assets allocated to equities, fixed income, and
other investments was 32.5%, 49.1%, and 18.4%, respectively,
at the end of FY2019, compared with 32.1%, 48.0%, and 19.9%,
respectively, at the end of FY2018.
Unlike in FY2018, when plans with high allocations to fixed
income (over 50%) outperformed the other plans (-2.6%
average return compared with -4.4%), in FY2019 the plans with
high allocations to fixed income underperformed the other
plans (16.9% compared with 19.1%).
Over the last five years, the plans with consistently high
allocations to fixed income have slightly underperformed
the other plans while also experiencing lower funded ratio
volatility. Among the 86 companies in the Milliman PFS with
calendar fiscal years, 26 pension plans had fixed income
allocations greater than 40.0% at the end of FY2014 and
maintained an allocation of at least 40.0% through FY2019.
Over this five-year period, these 26 plans experienced lower
funded ratio volatility than the other 60 plans (an average
funded ratio volatility of 3.4% versus 4.4% for the other 60
plans) while earning a slightly lower five-year annualized rate
of return (an average of 6.6% versus 7.1%). Plans with at least
50% in fixed income have outperformed other plans over three
of the last five years.
FIGURE 5: FIXED INCOME ALLOCATION 50% OR HIGHER
(CALENDAR YEAR FISCAL YEARS ONLY)

Overall, allocations to equities increased slightly during
FY2019, resulting in an average allocation of 32.5%. Only two of
the 100 companies had increases to their equity allocations of
more than 10.0% in 2019. Five companies decreased their equity
allocations by more than 10.0% in 2019, compared with 21 in
2018, one in 2017, four in 2016, five in 2015, 10 in 2014, five in 2013,
four in 2012, and 10 in 2011.
Overall allocations to fixed income increased in FY2019, resulting
in an average allocation of 49.1%. Only one company had a
decrease of more than 10.0% in its fixed income allocation. Eight
companies, however, increased their fixed income allocations by
more than 10.0% in 2019, compared with 16 in 2018, three in 2017,
three in 2016, three in 2015, five in 2014, three in 2013, two in 2012,
and six in 2011.
FIGURE 6: ASSET ALLOCATION OVER TIME

Other asset classes include real estate, private equity, hedge funds,
commodities, and cash equivalents. More specific details on how
investments are allocated to the other categories are generally not
available in the U.S. Securities and Exchange Commission (SEC)
filings of the companies. Overall, allocations to other asset classes
decreased in FY2019, resulting in an average allocation of 18.4%.
Only two companies increased their allocations by 5.0% or more
to other asset classes during 2019 while 11 companies decreased
their allocation by 5.0% or more.
For comparison purposes, we have looked at historical changes
since FY2005, the first year when the Milliman 100 companies
consistently made allocation information available. The allocation
to equities was down from 61.8% and the allocation to fixed
income instruments was up from 28.6% at the end of FY2005. The
percentage of investments in other asset classes was also up from
the 9.6% allocation at the end of FY2005.
PRT activities continue
Plan sponsors continued to execute PRT activities in FY2019
as a way of divesting pension obligations from their DB
plans and corporate balance sheets, although volume for the
Milliman 100 companies was down relative to FY2018. Largescale
pension buyout programs and lump-sum windows were
transacted for four of the Milliman 100 companies as pension
assets and liabilities were either transferred to insurance
companies or paid out to participants. GE, Lockheed Martin
Corporation, PepsiCo, and Ford Motor Company reported
total transactions of $2.7 billion, $1.9 billion, $1.3 billion, and
$1.3 billion, respectively.
The 2019 PRT market declined when compared with the
record high 2018 market. We’ve only been able to estimate the
dollar volume of PRT activities from Form 10-K disclosures,
and therefore we are unable to be “precise” on the reported
dollar volume in FY2019 of $13.5 billion. This decrease of $5.3
billion is compared with the FY 2018 reported dollar volume
of $18.8 billion.
PRTs are deemed by plan sponsors to be an effective way
to reduce a pension plan’s balance sheet footprint, but
generally they have an adverse effect on the plan’s funded
status, as assets paid to transfer accrued pension liabilities
are higher than the corresponding actuarial liabilities that
are extinguished from plans. Much of this incongruity stems
from Internal Revenue Service (IRS) pension plan valuation
rules differing from an insurance company’s underwriting
assessment of these same liabilities.
The Office of PBGC Participant and Plan Sponsor Advocate
has stated that the PBGC premiums are a core reason for
plan sponsors to divest DB plans. PBGC flat dollar premiums
increased to $80 in 2019 from $74 in 2018. The PBGC “variable
rate premium” increased to 4.3% of the pension plan’s PBGCfunded
status deficit in 2019, from 3.8% of the 2018 deficit.
(The PBGC’s funded status deficit uses interest rates and
mortality assumptions that are different from those used to
determine the funded status of the Milliman 100 companies.)
Reconciliation with January 2020
Milliman 100 PFI
The FY2019 funded ratio of 87.5% was lower than we reported
in the January 2020 Milliman 100 Pension Funding Index (PFI).
The January 2020 PFI funded ratio of 89.0%, measured as of
Dec. 31, 2019, was based on data collected for the 2019 Milliman
Pension Funding Study. This revised funded ratio of 87.5% from
our current study reflects the collection and collation of more
recent publicly available information for companies with fiscal
years ending in 2019.
Falling discount rates in FY2019
eroded the funded status, but
better-than-expected asset returns
dampened the decline
Discount rates used to measure plan obligations, determined
by reference to high-quality corporate bonds, decreased during
2019, thereby increasing liabilities. The average discount rate
decreased to 3.06% at the end of FY2019 from 4.00% in FY2018.
For historical perspective, discount rates have generally
declined from the 7.63% reported at the end of FY1999. Over
the last decade, discount rate increases have only occurred
during three fiscal years (2013, 2015, and 2018).
The increase in the PBO due to the lower discount rates offset
the favorable investment returns of 17.3%. The net impact of
investment gains, discount rates, contributions, and settlements
was relatively little change. The funded ratio improved slightly
from 87.1% to 87.5% in FY2019. However, due to the increase of
both the assets and liabilities, the funded deficit rose by $16.8
billion in FY2019 from $215.0 billion to $231.8 billion.
FIGURE 7: PENSION SURPLUS/(DEFICIT)

FIGURE 8: PENSION SURPLUS/(DEFICIT): ASSETS AND PBO

The effect of a decrease of 94 basis points in discount rates
offset the great investment gains during FY2019.
Pension obligations rose 10.8% in FY2019, the primary driver
of which was the decrease in discount rates. This was slightly
dampened by the downward pressure on obligations caused by
PRT activity and revisions to the life expectancy assumptions
used to measure pension plan obligations. The net result was a
liability increase of $180.7 billion.
The 17.3% investment return (actual weighted average return on
assets during FY2019) resulted in an increase of $163.9 billion
in the market value of plan assets after including $34.0 billion
in contributions, approximately $13.5 billion paid out in annuity
purchases or lump-sum settlements and $95 billion in regular
benefit payments. The Milliman 100 companies had set their
long-term investment gain expectations to be, on average, 6.5%
during FY2019 down from the expectation of 6.6% set for FY2018.
2019 funded ratio barely changes,
increases by 0.4%
The funded ratio of the Milliman 100 pension plans increased
during FY2019 to 87.5% from 87.1% at the end of FY2018.
Please note that not all of the 100 companies have a fiscal
year 2019 that corresponds to calendar year 2019. In order to
recognize that difference, we report a funded ratio of 87.5% for
the 86 plans with calendar fiscal years in 2019, up from 86.6%
for 2018. Fourteen companies have different fiscal year starting
dates. Their funded status at the end of FY2019 is 87.4%.
The aggregate pension deficit increased by $7.5 billion during
these calendar year companies’ 2019 fiscal years to $211.7 billion,
from an aggregate deficit of $204.2 billion at the end of FY2018.
For fiscal year 2019, funded ratios (across all 100 companies)
ranged from a low of 66.8% for Proctor & Gamble to a high of
142.7% for NextEra Energy, Inc.
FIGURE 9: FUNDED RATIO, ASSETS/PBO

The 0.4% increase in the FY2019 funded ratio added to the
improvement seen over the prior two years. Note that there
has not been a funding surplus since the 105.6% funded ratio in
FY2007.
Thirteen of the 86 Milliman 100 companies with calendar
fiscal years reported surplus funded status at year-end 2019,
compared with 12 companies in 2018, 13 in 2017, eight in 2016,
nine in 2015, eight in 2014, and 18 in 2013. These numbers pale
in comparison with the 46 companies with reported surplus
funded status at year-end 2007. Fifty-four of the Milliman 100
companies with calendar fiscal years reported an increase in
funded ratio for 2019, compared with 39 for 2018.
FIGURE 10: DISTRIBUTION BY FUNDED STATUS – 2014-2019
(CALENDAR YEAR FISCAL YEARS ONLY)

FY2019 pension expense increase
There was a net increase in FY2019 pension expense: a $26.5
billion charge to earnings ($10.3 billion higher than in FY2018).
This is well below the $56.2 billion peak level in FY2012.
Twenty-seven companies recorded FY2019 pension income
(i.e., a credit to earnings). Thirty-two companies recorded
income in FY2018 and 24 companies in FY2017, up from eight
in FY2012.
FIGURE 11: PENSION EXPENSE (INCOME) AND CONTRIBUTIONS

The aggregate 2019 cash contributions of the Milliman 100
companies were $34.0 billion, a decrease of $25.5 billion from
the $59.5 billion contributed in 2018, and $27.8 billion less than
the 2017 high level of $61.8 billion. Contributions had started to
increase in 2016 to $42.2 billion from the amounts contributed
in 2015 and 2014 ($31.8 billion and $40.9 billion, respectively).
Pension deficit decreases slightly as a
percentage of market capitalization
The total market capitalization for the Milliman 100 companies
increased by 16.6%. This was mostly offset by the increase in
pension obligations (due to higher discount rates), so the net
result was only a decrease in the unfunded pension liability
as a percentage of market capitalization of 0.3% at the end
of FY2019, compared with a decrease of 0.1% at the end of
FY2018. Pension deficits represented less than 10.0% of market
capitalization for 81 of the Milliman 100 companies in FY2019
and 79 of the Milliman 100 companies in FY2018. This is also
an increase from FY2012, when 59 companies had deficits that
were less than 10.0% of their market capitalizations.
Since FY2011, these pensions had investment gains exceeding
expectations six out of nine years, which has resulted
in elevated levels of market capitalization. In FY2019,
one company’s plan deficit exceeded 50.0% of market
capitalization, down from two companies in FY2015. This is
down from nine in FY2012 and FY2011, the year we first started
tracking this figure.
FIGURE 12: UNDERFUNDED PENSION LIABILITY AS A PERCENTAGE
OF MARKET CAPITALIZATION 2016-2019

Investment performance
above expectations
The weighted average investment return on pension assets
for the 2019 fiscal years of the Milliman 100 companies was
17.3%, which was above their average expected rates of return
of 6.5%. Ninety-six of the Milliman 100 companies exceeded
their expected returns in 2019. One company exceeded their
expected return in 2018 (it has an off-calendar fiscal year).
Ninety-six companies exceeded their expected returns in
2017 and 68 in 2016. However, only three companies exceeded
their expected returns in 2015 and all three had off-calendar
fiscal years. But 81 companies in 2014 exceeded their expected
returns compared with 79 in 2013, 93 in 2012, 22 in 2011, and
97 in 2010.
At the end of FY2019, total asset levels were $1.617 trillion. This
is $348 billion above the value of $1.269 trillion at the end of
FY2007, prior to the collapse of the global financial markets.
FIGURE 13: INVESTMENT RETURN ON PLAN ASSETS

During FY2019, investment gains and contributions were
partially offset by annuity purchases, lump-sum settlements
and regular benefit payments and increased the market value of
assets by $163.9 billion. The Milliman 100 companies’ estimated
investment return for FY2019 was $242.5 billion compared with
the expected return of $93.7 billion, a difference of $148.8 billion.
For the five-year period ending in 2019, investment performance
has averaged 6.9% compounded annually (only considering plans
with calendar fiscal years). There have only been four years of
investment losses over the past 20 years (2001, 2002, 2008, and
2018), contributing to an annualized investment gain of 6.3% over
that period (only considering plans with calendar fiscal years).
Expected rates of return
FIGURE 14: SPONSOR-REPORTED ASSUMED RATE OF RETURN
ON INVESTMENTS

Companies continued to lower their expected rates of return on
plan assets to an average of 6.5% for FY2019, as compared with
6.6% for FY2018, 6.8% for FY2017, 7.0% for FY2016, 7.2% for
FY2015, 7.3% for FY2014, 7.4% for FY2013, 7.6% for FY2012, 7.8%
for FY2011, and 8.0% for FY2010. This represents a significant
drop from the average expected rate of return of 9.4% back in
FY2000.
Like last year, none of the Milliman 100 companies utilized an
expected rate of return for FY2019 of at least 9.0% (the highest
was 8.97%). Only two companies had utilized an expected rate
of return of at least 9.0% in 2012, 2011, and 2010, but this was
down from four in 2009 and a high of 80 in 2000.
What to expect in 2020 and beyond
Our expectations in the coming year include:
- Plan sponsor strategies in response to the Coronavirus
Aid, Relief, and Economic Security Act (CARES) and the
Setting Every Community Up for Retirement Enhancement
(SECURE) Act are just starting. The CARES Act permits
a plan sponsor to voluntarily delay contributions to the
pension plan until January 1, 2021. The SECURE Act permits
a plan sponsor to amend the plan to allow in-service
distributions as early as age 59½ as well as changing the
Required Minimum Distribution age to 72 from 70½. We will
refrain from any predictions due to lack of information from
plan sponsors as this report is published in April 2020.
- Plan sponsors who are considering to voluntary defer
contributions in 2020 should keep in mind the effect of
their decisions on plan funded status, tax deductions, PBGC
premiums, and pension expense. The effect on each must
be carefully reviewed. Furthermore, with IRS interest rate
smoothing provisions expected to partially expire starting in
plan years beginning in 2021, plan sponsors need to prepare
themselves for the rise in minimum funding requirements in
the next several years ahead beyond 2020.
- Plan sponsors will need to consider whether to rebalance
or shift asset allocations in light of the falling equity values,
rising fixed income prices, and changing capital market
assumptions so far in 2020.
- Pension expense for companies with mature plans with
primarily inactive liabilities is expected to decrease compared
with the FY2019 level. This is due to the investment gains
experienced during 2019 as well as the significant drop in
discount rates. While the lower discount rates result in higher
pension obligations, the net effect will be a lowering of the
interest cost components of pension expense.
- On the other hand, for companies with more interest rate
sensitivity and thus higher durations of liabilities, the gain
from the expected return on assets could be offset by the
relative increases in the interest cost and loss amortization
components of pension expense. These companies could see
increases in pension expense in FY2020 relative to FY2019.
- As employers adapt to the business impact and emerging new
realities of the Coronavirus pandemic, the appetite for further
pension risk transfer activities such as lump-sum windows and
pension lift-outs in 2020 seems low or at best uncertain.
- While PBGC premiums remain a concern for plan sponsors
there are many other things to consider in 2020 in light of the
already enacted pension relief, the prospect of future relief
and our new normal.
HISTORICAL VALUES (All dollar amounts in millions. Numbers may not add up correctly due to rounding.)
FIGURE 15: FUNDED STATUS

FIGURE 16: RETURN ON ASSETS

FIGURE 17: PENSION COST

FIGURE 18: ASSET ALLOCATIONS (BY PERCENTAGE)

FIGURE 19: PENSION PLAN INFORMATION BY BUSINESS SECTOR

FIGURE 20: OPEB FUNDED STATUS

Who are the Milliman 100 companies?
The Milliman 100 companies are the 100 U.S. public companies with the largest defined benefit (DB) pension plan assets for which
a 2019 annual report was released by March 13, 2020.
This 2020 report is Milliman’s 20th annual study. The total value of the pension plan assets of the Milliman 100 companies was more
than $1.61 trillion at the end of FY 2019.
About the study
The results of the Milliman 2020 Pension Funding Study (PFS)
are based on the pension plan accounting information disclosed
in the footnotes to the companies’ Form 10-K annual reports for
the 2020 fiscal year and for previous fiscal years. These figures
represent the Generally Accepted Accounting Principles
(GAAP) accounting information that public companies are
required to report under Financial Accounting Standards
Board (FASB) Accounting Standards Codification Subtopics
715-20, 715-30, and 715-60. In addition to providing the financial
information on the funded status of their U.S. qualified pension
plans, the footnotes may also include figures for the companies’
nonqualified and foreign plans, both of which are often
unfunded or subject to different funding standards from those
for U.S. qualified pension plans. The information, data, and
footnotes do not represent the funded status of the companies’
U.S. qualified pension plans under ERISA.
Fourteen of the companies in the 2020 Milliman Pension Funding
Study had fiscal years other than the calendar year. The 2020 study
includes five new companies to reflect mergers, acquisitions, and
other corporate transactions during FY 2019. Figures quoted from
2019 reflect the 2020 composition of Milliman 100 companies and
may not necessarily match results published in the 2019 Milliman
PFS. Generally, the group of Milliman 100 companies selected
remains consistent from year to year. Privately held companies,
mutual insurance companies, and U.S. subsidiaries of foreign
parents were excluded from the study.
The results of the 2020 study will be used to update the Milliman
100 Pension Funding Index (PFI) as of December 31, 2019, the
basis of which will be used for projections in 2020 and beyond.
The Milliman 100 PFI is published on a monthly basis and
reflects the effect of market returns and interest rate changes on
pension funded status.
About the authors
Zorast Wadia, FSA, CFA, EA, MAAA, is a principal and
consulting actuary in the New York office of Milliman. He has
more than 20 years of experience in advising plan sponsors on
their retirement programs. Zorast has expertise in the valuation
of qualified and nonqualified plans. He also has expertise in the
areas of pension plan compliance, design, and risk management.
Alan H. Perry, FSA, CFA, MAAA, is a principal and consulting
actuary in the Philadelphia office of Milliman. He has more
than 29 years of experience in advising plan sponsors on asset
allocation and financial risk management. Alan specializes
in the development of investment policies by performing
asset-liability studies that focus on asset mix, liability-driven
investing, and risk hedging.
Charles J. Clark, ASA, EA, MAAA, is a principal and director
of the employee benefits research group in the Washington,
D.C., and New York offices of Milliman. He has over 39 years of
experience as a consulting actuary. Charles provides analysis
of employee benefits legislation, regulations, and accounting
standards to Milliman consultants. He has worked extensively
with plan sponsors, Washington, D.C., employee benefits trade
groups, and lawmakers on employee benefits program strategy,
design, pricing, and interpretation.
Acknowledgments
The authors thank the following Milliman colleagues for their
assistance in compiling the figures and editing the report for the
Milliman 2020 Pension Funding Study: Shweta Bedi, Amanda
Cohen, Keila Cohen, Ryan Cook, Rebecca Driskill, Naman Jain,
Jeremy Engdahl-Johnson, Kevin Ferris, Smriti Kohli, Rohan
Malik, Jamie Phillips, Palak Tuteja, Divyang Varsani, Mike
Wilson, Susan Yearick, and Lynn Yu.