New data from two investment giants show that U.S. corporate pensions are in a better position than they’ve ever been. That said, a significant portion of pensions — of all sizes — still struggle with funding issues.
“Many plans have become more liability aware,” said Calvin Yu, head of the client solutions group within BlackRock's Americas institutional business. “The last few years, you’ve seen a tug-of-war between asset volatility on one side and higher rates on the other, increasing the discount rate. The result is a much healthier pension system.”
Based on the 200 largest U.S. corporate DB plans tracked by BlackRock as of each plan's 2025 fiscal year-end, the average funded ratio reached a record high of 108 percent in 2025, with more than half of corporate DB plans now fully funded. This marks the strongest funded position since the global financial crisis. In its own report on the topic, J.P. Morgan Asset Management concluded something similar, finding that the 100 largest plans had an average funded status of 104 percent in 2025.
Still, many plans face significant funding gaps, with 22 percent being less than 90 percent funded. Yu said “there’s no cohesive pattern” as to which plans are over or underfunded.
“Each plan has its own unique goals and objectives,” he said, adding that it depends on a variety of factors, tied to whether plans have active and accruing liabilities or if they are closed or frozen.
According to BlackRock, the expected return on assets (EROA) rose to 6.7 percent due to rising interest rates boosting fixed income and pension return expectations. EROA varied little by funded status, indicating that plan-specific factors — like liabilities, sponsor goals, glidepath, governance, active vs. passive investing, and asset allocation — matter more.
BlackRock found fixed income accounts for 54 percent of the average plan portfolio in their analysis. However, larger plans tend to allocate more broadly, including private markets.
JPMAM found that while aggregate allocations remained steady, several plans actively re-risked their target allocations in 2025. Coca-Cola, for example, reduced its fixed income target for its U.S. plan to 37 percent from 47 percent, reallocating 8 percent from long-duration and the remainder from multi-strategy credit to public equities. Coke also replaced real estate with real assets.
“Another notable trend emerged as several sponsors reclassified private credit, shifting it from alternatives into fixed income,” writes Michael Buchenholz, JPMAM’s head of U.S. pension strategy. “This shift reflects a broader recalibration among public pension plans toward a total portfolio approach,” which focuses on making investment decisions holistically rather than within siloed asset classes.
Now that most of the largest plans have reached full funding, many are now applying pension surplus to fund benefit innovations, support business strategies, and enable acquisitions, according to JPMAM.
Sponsors are finding creative ways to monetize surplus, from IBM reopening its well-funded frozen DB plan to offer new cash balance benefits to employees in 2023 to Kodak terminating its overfunded $3.1 billion pension and replacing it with a similar cash balance benefit. Even sponsors of underfunded plans can make more competitive bids because the target’s surplus would close the bidder’s deficit (e.g., Chevron’s acquisition of Hess).
