Financial risk associated with pension plans is improving and will likely continue to continue to improve in the coming years, according to Watson Wyatt.

Watson Wyatt analyzed Fortune 1000 companies that sponsored defined benefit pension plans in 2005.

Pension health will likely continue to improve due to the rise in interest rates and strong stock market returns in 2006, coupled with new investment strategies and increased employer funding.

The analysis found that pension plan liabilities posted relatively high amounts of financial risk for only 9% of companies, down from 17 % in 2003. Meanwhile, more pension sponsors experienced relatively low pension-related risk. Pension liabilities posed limited risk to the core business for 60% of plan sponsors, an increase from about 56 % in 2004 and 51 % in 2003.

“Thanks to a sound economy and considerable corporate contributions, America’s pension plans are generally on firmer financial footing than they were two years ago,” said Mark Warshawsky, director of retirement research at Watson Wyatt.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.