The funded status of the 100 largest U.S. corporate pension plans improved slightly in 2009 after the disastrous previous year, Pensions & Investments magazine's review of annual reports shows.

The aggregate funded ratio of the top 100 plans rose to 83.9% in 2009 from 81.2% in 2008. The plans had an aggregate funding deficit of $180 billion in 2009, based on projected benefit obligations. In the previous year, funding had plunged to a deficit of $198.9 billion, wiping out five consecutive years of gains. The top 100 plans had an aggregate surplus of $111.1 billion in 2007 and $37.3 billion in 2006.

The small increase was due to a healthier return environment in 2009, as well as higher employer contributions.

“When we looked at contributions in 2009, it was the highest level since 2003. That's the environment you need to see to have a more healthy funded state,” said Steven J. Foresti, managing director at Wilshire Associates Inc. in Santa Monica, Calif.

“There's the liability accounting side of things, too, which is driven in large part by interest rates,” Mr. Foresti said. The increase in the funding ratio was tempered by lower interest rates.

Ten firms reported a funding surplus. FPL Group in Juno Beach, Fla., reported the highest funding ratio of the top 100 — 162%. The utility had $3.03 billion in plan assets compared with $1.87 billion in projected benefit obligations.

The rest of the top five were MeadWestvaco Corp. in Richmond, Va., with $3.39 billion in plan assets and $2.46 billion in pension benefit obligations, for a funding ratio of 138%; JPMorgan Chase & Co. in New York with $10.22 billion in plan assets and $7.98 billion in pension benefit obligations, at 128%; Bank of New York Mellon Corp. in New York, with $3.3 billion in plan assets and $2.8 billion in obligations, at 118%; and SunTrust Banks Inc. in Atlanta, with $2.33 billion in plan assets and $2.01 billion in projected benefit obligations, at 116%.

Airlines once again were at the bottom of P&I's funded status ranking.

Delta Air Lines Inc. in Atlanta reported plan assets of $7.62 billion compared with $17.03 billion in projected benefit obligations, for a funded ratio of 44.8%, the lowest of the top 100.

Delta reported an actual return on plan assets of $1.2 billion, or 15.7% of plan assets, and contributed $200 million to its plan in 2009. The company also contributed $558 million in April to its U.S. plans, bringing its total thus far in 2010 to $665 million. The annual report announced the firm's intention to contribute a total of $720 million this year.

In 2008, the first year after the merger of Delta and Northwest Airlines Inc., the airline reported $7.3 billion in plan assets and $15.9 billion in pension obligations, for a funded ratio of about 46%.

American Airlines Inc. in Fort Worth, Texas, reported plan assets of $7.05 billion and $12 billion in pension obligations, for a funded ratio of 58.7%, the second lowest of the top 100. American reported an actual return on assets of $928 million, or 13.2% of assets, and contributed $10 million in 2009.

Rounding out the bottom five: ConocoPhillips in Houston reported a funded ratio of 62.4%; Whirlpool Corp. in Benton Harbor, Mich., 62.5%; and Goodyear Tire & Rubber Co. in Akron, Ohio, 63.9%.

Of the top 100 firms, JPMorgan Chase saw the greatest improvement in its funded ratio, an increase of 39 percentage points from 89.1% in 2008. The firm contributed $2.8 billion to its pension plans and had an actual return on plan assets of $1.15 billion, or 11.2% of plan assets, in 2009. A spokeswoman didn't return a phone call by press time seeking comment.

Actual returns on plan assets overall improved dramatically in 2009. Only two companies reported negative returns on plan assets, and both have fiscal years that included the market's downward spiral in fall 2008. (The other 98 are for calendar-year 2009.)

General Mills Inc. in Minneapolis, which had a fiscal year that ended May 31, 2009, reported a loss of $1 billion, or 32%. Emerson Electric Co. in St. Louis, which had a fiscal year that ended Sept. 30, 2009, reported a loss of $311 million, or 11%.

General Mills and Emerson Electric were two of the three firms that saw the greatest decrease in their funded ratios, along with Walt Disney Co. in Burbank, Calif., whose fiscal year ended on Oct. 3, 2009. Disney's return was relatively flat at $25 million, or 0.5%.

Caterpillar Inc. in Peoria, Ill., experienced the greatest percentage return on plan assets, with 24.3%. The firm reported a return of $2.19 billion in 2009 with a fair value of plan assets of $9.02 billion. Eleven other firms also posted positive returns of more than 20%. A spokesman declined to comment, but the company's fourth-quarter earnings report cited “appreciation of Caterpillar stock” as one reason for its “strong asset returns.”

The average long-term expected return on plan assets fell to 8.23% in 2009 from 8.31% in 2008. The average discount rate used to determine benefit obligations fell to 5.96% in 2009, from 6.45% in 2008.

Overall, company contributions more than doubled in 2009, to $38.8 billion from $19.1 billion in 2008. Eleven firms contributed more than $1 billion.

Exxon Mobil Corp. in Irving, Texas, made the largest employer contribution in 2009: $3.07 billion. The firm's actual return on plan assets came to $2.01 billion, or 19.6% of plan assets, bringing the funding ratio up to 73.5% in 2009, up from 50% in 2008.

The rest of the top five in contributions were JPMorgan, $2.8 billion; Boeing Co. in Chicago, $1.58 billion; Chevron Corp. in San Ramon, Calif., $1.49 billion; and Lockheed Martin Corp. in Bethesda, Md., $1.48 billion.

The top 100 intend to contribute about $19.3 billion in 2010, considerably less than in 2009, because of funding relief in the Worker, Retiree, and Employer Recovery Act of 2008. That law eased funding regulations of the Pension Protection Act of 2006, allowing plans to smooth the value of pension assets over 24 months.

“Expected contributions as reported are not that high for the current year. Things change, but the real big picture that we're not required to report is what it looks like over the next several years,” said Alan Glickstein, a Dallas-based senior retirement consultant at Towers Watson & Co. “The real pressure comes in 2011 and 2012.”

Under the funding requirements in the 2008 law, for example, General Motors Co. in Detroit, alone would be required to contribute $5.9 billion in 2013 and $6.4 billion in 2014, according to a Government Accountability Office report.

However, funding requirements could change if the American Jobs and Closing Tax Loopholes Act of 2010 becomes law. On May 28, the bill, H.R. 4213, passed the House of Representatives and, at press time, was pending in the Senate.

The result of further pressure from pension fund executives for more funding relief, the new bill would allow defined benefit plans to stretch out amortization periods for investment losses for two of the years between 2008 and 2011, over a period of either nine or 15 years, at the option of the plan sponsor.

Concerning sponsors going forward is avoiding the pattern of getting funding levels up and experiencing new crises every time there is a market downturn.

“Look (ahead) to the future and look at not just getting back to higher funding levels, but also incorporating a derisking strategy while that's happening,” Wilshire's Mr. Foresti said. “But I think there's an idea of dynamically thinking of asset allocation going forward.”

“It's going to take contributions and going through this experience (market downturns) a couple of times in the last decade, (but) plans will look forward to taking a derisking strategy.”

Rob Kozlowski is a reporter for Pensions & Investments, a sister publication of Business Insurance.