Sponsors of private, single-employer defined benefit pension plans are facing increasing funding requirements due to a combination of interest rate and equity market conditions, according to a new report.
The Society of Actuaries, Schaumburg, Ill., published this finding in a new report, “The Rising Tide of Pension Contributions Post-2008: How Much and When?” The report uses data from the regulatory filings of the private sector defined benefit pension system and the Pension Insurance Modeling System, originally developed for the Pension Benefit Guaranty Corp., to analyze the private, single-employer defined benefit system.
The research shows that aggregate contribution levels are sensitive to the effects of stock market returns due to significant exposure to equity investments in the system.
According to the report, employers contributed an average of $70 billion per year over the five years ending in 2009. Required contributions are expected to average $90 billion per year between 2010 and 2020, reaching a peak level of $140 billion in 2016.