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Press Release

COVID-19 takes bite out of U.S. corporate pension plans

Decline in equity markets fuels drop of 8 percentage points in funded status during first quarter, Willis Towers Watson analysis finds

April 2, 2020

Risque de pandémie

ARLINGTON, VA, April 2, 2020 — The funded status of the nation’s largest corporate pension plans fell by eight percentage points during the first quarter of 2020, driven primarily by declines in equity markets, according to an analysis by Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company.

Willis Towers Watson examined pension plan data for 376 Fortune 1000 companies that sponsor U.S. defined benefit pension plans. Results indicate the aggregate pension funded status is estimated to be 79% as of March 31, 2020, compared with 87% at the end of 2019. That’s the lowest funded status plans have experienced since 2012, when the year-end funded status stood at 77%. The analysis found the pension deficit is projected to be $365 billion as of March 31, 2020, higher than the $229 billion deficit at the end of 2019. Unlike pension assets, pension obligations increased minimally from $1.75 trillion at the end of 2019 to $1.76 trillion at March 31, 2020.

“Corporate pension plans took a hit in the first quarter,” said Royce Kosoff, managing director, Retirement, Willis Towers Watson. “As a result, aggregate funding levels declined to a level we haven’t seen since 2012. Sponsors recently gained some reprieve with funding requirements deferred for 2020 but will likely face significant cost increases in 2021 and beyond. This serves as a fresh reminder for plan sponsors to carefully review their funding policy, investment allocation and overall risk management approach.”

Pension plan assets decreased during the quarter from $1.52 trillion at the end of 2019 to $1.40 trillion as of March 31, 2020. Overall investment returns are estimated to have fallen by 7% in the first quarter, although returns varied significantly by asset class. Domestic large capitalization equities dropped significantly by 20%, while domestic small/mid-capitalization equities fell by 30%. U.S. aggregate bonds recognized gains of 3%, while long corporate and long government bonds, typically used in liability-driven investing strategies, realized drastically different results. Long corporate bonds realized losses of 5% while long government bonds realized gains of 21%.*

“The fallout from a volatile first quarter was not uniform across plan sponsors,” said Richard McEvoy, U.S. lead, Delegated Integrated Solutions, Willis Towers Watson. “On the growth asset side, the composition of growth assets was the primary driver of results with diversified allocations mitigating drawdowns. Rates and credit spreads also had a wild ride, and liability-driven investment strategies limited the damage to funding levels in many cases. A key element was how plan sponsors allocated between Treasuries and credit. Overall, we saw significant variations of outcomes, reflecting the wider variation in pension strategies taken today than in years past.”

About the analysis

Willis Towers Watson analyzed 376 Fortune 1000 companies for which complete data were available. First quarter 2020 figures are estimates of U.S. plan assets and liabilities.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at

*Domestic large capitalization equities are measured by the S&P 500 Index; domestic small/mid-capitalization equities are measured by the Russell 2500 Index; U.S. aggregate bonds are measured by Bloomberg Barclay Aggregate; U.S. long corporate bonds are measured by Bloomberg Barclays Long U.S. Credit; U.S. government bonds are measured by Bloomberg Barclays Long Treasury.

Disclaimer – Educational Materials

The information included in this presentation is intended for general educational purposes only and does not take into consideration individual circumstances. Such information should not be relied upon without further review with your Willis Towers Watson consultant. The views expressed herein are as of the date given. Material developments may occur subsequent to this presentation rendering it incomplete and inaccurate. Willis Towers Watson assumes no obligation to advise you of any such developments or to update the presentation to reflect such developments. The information included in this presentation is not based on the particular investment situation or requirements of any specific trust, plan, fiduciary, plan participant or beneficiary, endowment, or any other fund; any examples or illustrations used in this presentation are hypothetical. As such, this presentation should not be relied upon for investment or other financial decisions, and no such decisions should be taken on the basis of its contents without seeking specific advice. Willis Towers Watson does not intend for anything in this presentation to constitute “investment advice” within the meaning of 29 C.F.R. § 2510.3-21 to any employee benefit plan subject to the Employee Retirement Income Security Act and/or section 4975 of the Internal Revenue Code.

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