US Corporate Pensions Enter Surplus Era as Funding Hits 108%, Yet Divides Widen
A recent BlackRock study reveals that US corporate pension plans have entered a 'surplus era,' with average funding levels reaching 108% by the end of the 2025 fiscal year, the highest since the global financial crisis. This milestone reflects the cumulative impact of higher interest rates and sustained de-risking efforts. However, the report highlights a widening divergence among plans; while over half are fully funded, more than 20% remain below 90% funded. Consequently, many sponsors are shifting their strategic focus from growth to preservation, prioritizing liability-driven investing and conservative return assumptions to protect existing surpluses. Asset allocation trends show a move toward fixed income, which now comprises 54% of average portfolios, alongside increased exposure to credit assets and private investments for larger plans. Smaller plans continue to rely on public equities but are gradually adopting higher-yielding credit strategies. The study emphasizes that there is no one-size-fits-all approach, as outcomes depend heavily on plan-specific factors such as governance, liability structures, and investment design rather than broad market conditions alone.
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US Corporate Pensions Enter Surplus Era as Funding Hits 108%, Yet Divides Widen
A recent BlackRock study reveals that US corporate pension plans have entered a 'surplus era,' with average funding levels reaching 108% by the end of the 2025 fiscal year, the highest since the global financial crisis. This milestone reflects the cumulative impact of higher interest rates and sustained de-risking efforts. However, the report highlights a widening divergence among plans; while over half are fully funded, more than 20% remain below 90% funded. Consequently, many sponsors are shifting their strategic focus from growth to preservation, prioritizing liability-driven investing and conservative return assumptions to protect existing surpluses. Asset allocation trends show a move toward fixed income, which now comprises 54% of average portfolios, alongside increased exposure to credit assets and private investments for larger plans. Smaller plans continue to rely on public equities but are gradually adopting higher-yielding credit strategies. The study emphasizes that there is no one-size-fits-all approach, as outcomes depend heavily on plan-specific factors such as governance, liability structures, and investment design rather than broad market conditions alone.
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