UBS Global Asset Management says that, according to the inaugural UBS US Pension Fund Fitness Tracker, there has been a “dramatic improvement” in pension plan funding ratios in 2006. According to UBS Global Asset Management, a typical pension fund that started the year with a funding ratio of approximately 90% closed the year with a funding ratio of nearly 103%. UBS Global Asset Management estimates that the typical large corporate defined benefit plan saw an increase in assets for the year of almost 14%, while liabilities were roughly flat for the year, measured by the iBoxx US Pension Liability indices.
Separately, a Watson Wyatt analysis of FORTUNE 1000 companies that sponsored defined benefit pension plans in 2005 claims that pension plan liabilities posed relatively high amounts of financial risk for only 9% of companies, down from 17% in 2003 – a decline of about half over three years. Pension liabilities posed scant risk to the core business for 60% of the plan sponsor sampling, better than the 56% in 2004 and 51% in 2003. A separate Watson Wyatt analysis of pension funding found that the aggregate funding level for FORTUNE 1000 companies’ pension plans increased from 82% to 92% between 2002 and 2005.