Fed Shows US Corporate Pensions Spike in Assets

(June 12, 2011) — Corporate retirement plans in the United States have reached combined assets of $6.2 trillion as of March 31, according to the Federal Reserve’s Flow of Funds report.

Fueled largely by strong equity returns for both defined benefit and defined contribution plans, the total represents a 2.6% increase from the fourth quarter of 2010. As of March 31, while corporate defined benefit plan assets totaled $2.3 trillion, up 2.5% from the previous quarter, total assets in corporate defined contribution plans were roughly $4 trillion, up 2.7%. DC plans reached their highest level in the past five years of reporting.

Last month, a study by Aon Hewitt showed that liability-matching investments have been growing in popularity among US corporate pension plans. “Once just a strategic idea without much traction, liability-matching investments continue to grow as a proportion of plan assets,” Ari Jacobs, retirement strategy leader at Aon Hewitt, noted in a statement. “Regardless of the future direction of equity and bond markets, this shift should bring less volatility and greater predictability to pension plan costs.”

The report by the Fed also shows that the value of financial assets, including stocks and pension holdings, held by US households increased by $1.16 trillion in the first quarter.