Overfunded U.S. Pensions

Overfunded U.S. Pensions:
Uses and Benefits of Surplus Pension Assets

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Jeffrey Passmore, CFA
FEB 05, 2024

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Executive Summary

  • Corporate pension plans are sponsored by more than 500 of the Russell 3000 companies.1 
  • During the last few years, many of these pensions have become fully funded for the first time since 2008 and, because of widespread adoption of liability driven investing (LDI), bonds now represent a majority of pension assets. 
  • With more in hedging assets and less equity risk, pension surplus is likely to persist. 
  • This paper will discuss six possible uses of excess pension assets and the benefits of maintaining, i.e., not spending, a surplus.