Key Takeaways
- • U.S. corporate defined-benefit pension plans reached a record funded ratio of 108 percent in 2025, with more than half now fully funded, according to BlackRock's tracking of 200 largest corporate DB plans as of fiscal year-end 2025.
- • J.P. Morgan Asset Management's analysis of the 100 largest plans confirmed the trend, reporting an average funded status of 104 percent in 2025, marking the strongest position since the 2008 global financial crisis.
- • Despite overall improvement, 22 percent of plans remain underfunded below 90 percent, indicating persistent structural challenges tied to plan-specific factors including active vs. frozen liabilities, sponsor objectives, and asset allocation strategies.
- • Expected return on assets (EROA) increased to 6.7 percent, driven by higher interest rates that boosted fixed income valuations and pension return expectations, though EROA variations correlate more with plan-specific factors than funded status alone.
- • Plan health depends on heterogeneous factors—governance, glidepath strategy, active vs. passive management, and liability structure—rather than a cohesive pattern, according to Calvin Yu, head of BlackRock's client solutions group.
Summary
U.S. corporate pension plans have reached their strongest financial position in nearly two decades, with two major asset managers publishing data that confirms a sustained improvement in defined-benefit (DB) plan health through 2025. BlackRock's analysis of the 200 largest corporate DB plans found an average funded ratio of 108 percent as of fiscal year-end 2025, while J.P. Morgan Asset Management's separate study of the 100 largest plans reported an average funded status of 104 percent. Both datasets underscore a dramatic reversal from the underfunded crisis that characterized much of the post-2008 period.
The recovery reflects a fundamental shift in pension economics over recent years. Rising interest rates have increased discount rates used to value long-term pension liabilities, thereby reducing their present value and improving funded ratios. Simultaneously, fixed income yields have risen, boosting expected returns on pension assets. Calvin Yu, head of BlackRock's client solutions group, attributed this progress to plans becoming "more liability aware" and navigating the "tug-of-war between asset volatility on one side and higher rates on the other." This dynamic has created what Yu characterizes as "a much healthier pension system" overall.
However, the improvement masks persistent fragmentation across the pension landscape. BlackRock data shows that 22 percent of plans remain significantly underfunded—below 90 percent funded status—a notable portion despite the broad recovery. Yu emphasized that "there's no cohesive pattern" determining which plans thrive and which struggle. Plan health depends on idiosyncratic factors including whether plans carry active and accruing liabilities versus being closed or frozen to new members, sponsor financial goals, glidepath strategy, governance quality, and the mix between active and passive investing approaches. The expected return on assets (EROA) rose to 6.7 percent across the universe, but EROA variation correlates weakly with funded status, reinforcing that plan-specific asset allocation and liability management decisions matter more than aggregate funding levels.
The recovery reflects a fundamental shift in pension economics over recent years. Rising interest rates have increased discount rates used to value long-term pension liabilities, thereby reducing their present value and improving funded ratios. Simultaneously, fixed income yields have risen, boosting expected returns on pension assets. Calvin Yu, head of BlackRock's client solutions group, attributed this progress to plans becoming "more liability aware" and navigating the "tug-of-war between asset volatility on one side and higher rates on the other." This dynamic has created what Yu characterizes as "a much healthier pension system" overall.
However, the improvement masks persistent fragmentation across the pension landscape. BlackRock data shows that 22 percent of plans remain significantly underfunded—below 90 percent funded status—a notable portion despite the broad recovery. Yu emphasized that "there's no cohesive pattern" determining which plans thrive and which struggle. Plan health depends on idiosyncratic factors including whether plans carry active and accruing liabilities versus being closed or frozen to new members, sponsor financial goals, glidepath strategy, governance quality, and the mix between active and passive investing approaches. The expected return on assets (EROA) rose to 6.7 percent across the universe, but EROA variation correlates weakly with funded status, reinforcing that plan-specific asset allocation and liability management decisions matter more than aggregate funding levels.
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