2013 was a great year for defined benefit (DB) plans. A recent report by Mercer said that pension plans of the S&P 1500 companies are now 95% funded, up from 74% a year ago. Fueled by record high stock market levels, strong contributions by plan sponsors and modest increases in interest rates, sponsors of defined benefit plans are finding themselves in a much better position when looking at the funding of their DB plan.
While that’s great news for DB plans, it’s important that plan sponsors don’t become complacent. It wasn’t long ago that funding levels dipped to historic lows.
My recommendation to plan sponsors of DB plans right now? Be an elephant! Don’t forget about the risks a DB plan can have on your organization.