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$20 Billion Club Report: Members Slow To Commit To 2021 Contributions

Mar. 03, 2021 12:10 PM ET
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  • On average, funded ratio increased slightly from 84.9% to 86.2%, the highest level in eight years.
  • In 2021, a further extension and expansion of funding relief is possible, which would push funding requirements even further down the road.
  • 2021 still carries much of the uncertainty we felt in 2020, and we will continue tracking the actions of the $20 billion club members to understand the broader corporate DB universe.

For the largest U.S. listed DB plan sponsors - $20 billion club members - the year 2020 ended much as it began. On average, funded ratio increased slightly from 84.9% to 86.2%, the highest level in eight years. We document this in detail here. Unseen in these figures is the wild ride that was 2020. We saw the most volatile period in recent memory in equity values, interest rates and spread levels. Discount rates dropped, but equities compensated. And some sponsors even made large discretionary contributions.

In fact, employer contributions in 2020 exceeded expectations by about 60%. Asset returns were impressive, as these sponsors' equity and long duration fixed income allocations both performed well. But what is the outlook for 2021 and beyond? While we don't know with certainty, we do have a few clues as to what sponsors plan for 2021. Listed companies are required to disclose their estimated contributions for the upcoming year. Even though they are not bound to this estimate, over the last several years, this has proved to be a reasonable approximation for contributions to come.

So, what do 2021 contributions look like? Historically small.

While many sponsors within this group have chosen to take contribution holidays in the U.S. at times due to favorable funding relief, in a given year, we always see a few sponsors commit to make some form of discretionary contributions. In 2020, GE, Boeing (BA) and UPS all made multi-billion-dollar contributions, far beyond requirements. In 2018, Lockheed Martin (LMT), FedEx (FDX) and Raytheon (RTX) all made large payments to their U.S. DB plans. The year, 2021, is different. Not even one of these 19 companies has explicitly committed to discretionary contributions. This has not happened in recent memory, certainly not since MAP-21 funding relief was passed in 2012. See

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Russell Investments is a leading global investment solutions firm with $326.9 billion in assets under management (as of 3/31/2021) and $2.8 trillion in assets under advisement (as of 12/31/2020) for clients in 32 countries, The firm provides a wide range of investment capabilities to institutional investors, financial intermediaries, and individual investors around the world. Building on an 85-year legacy of continuous innovation to deliver exceptional value to clients, Russell Investments works every day to improve people’s financial security. Headquartered in Seattle, Washington, Russell Investments has offices in 19 cities around the world, including in New York, London, Tokyo, and Shanghai.  Russell Investments’ ownership is composed of a majority stake held by funds managed by TA Associates with minority stakes held by funds managed by Reverence Capital Partners, Russell Investments' management and Hamilton Lane Incorporated.Frank Russell Company is the owner of the Russell trademarks contained in this material and all trademark rights related to the Russell trademarks, which the members of the Russell Investments group of companies are permitted to use under license from Frank Russell Company. The members of the Russell Investments group of companies are not affiliated in any manner with Frank Russell Company or any entity operating under the “FTSE RUSSELL” brand.

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