Corporate Pension Assets at All-Time High

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Even as companies across the country drop traditional pensions in favor of 401(k)s, corporate defined-benefit plan assets currently sit at an all-time high, according to Federal Reserve data.

More from the Wall Street Journal:

The value of investments held by corporate defined-benefit plans—those that guarantee retirees a set payout—totaled $3.1 trillion at the end of 2014, according to the Federal Reserve.

That’s 5% more than a year earlier and more than five times as much as 30 years ago.

[…]

“It’s counterintuitive that assets are rising,” said Michael Moran, a managing director at Goldman Sachs Asset Management. But the math is simple, he added.

Pension-plan assets have grown by an average of between 9% and 13% a year for the past three decades.

Yet, the plans have only used between 6% and 8% of the assets to pay off retirees. That’s led to persistent growth.

The equation could change soon, however. More companies are considering pension transfers, and more baby boomers are retiring, Mr. Moran said.

That could mean pension-plan assets today are near their high water mark.

Corporate DB plans were 84.1% funded as of May 31, according to Milliman.

 

Photo by Sarath Kuchi via Flickr CC License

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