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Funded Status of Private DB Plans Took a Hit in ’14, Study Says

The funded status of certain private sector defined benefit plans lost ground in 2014, according to a recently released study. The aggregate funded status among the TW Pension 100 fell eight percentage points to 81%, Towers Watson reports. The TW Pension 100 is composed of sponsors of the 100 biggest U.S. pension plans offered by U.S. publicly traded organizations.

The plans’ assets grew in 2014 because investment returns were good, Towers Watson said. Assets were 3% higher than those of 2013.

But liabilities grew, too — and to such an extent that their growth outpaced that in assets. Towers Watson attributed the worsening of liabilities to falling interest rates and updated mortality assumptions. An additional complicating factor was the level of cash contributions, which Towers Watson said further impaired the ability of asset growth to overcome growth of liabilities.

BNY Mellon and Legal & General Investment Management America reported similar findings concerning corporate pension plans in the first quarter of this year.