Ford Motor Co. intends to contribute a total of $1.1 billion in cash to its funded defined benefit plans worldwide in 2015, the Dearborn Heights, Mich.-based company revealed Thursday in its fourth-quarter earnings report.
The 2015 cash inflows to Ford’s U.S. and non-U.S. plans are mostly mandatory, the company’s 8-K SEC filing showed.
The contribution forecast for the current year is less than the $1.5 billion aggregate cash contribution the automaker made to its worldwide pension plans in 2014, which in turn was down $3.5 billion from 2013, “reflecting our improved funded status,” said Neil Schloss, Ford’s treasurer and vice president, according to a transcript of Thursday’s earnings conference call.
Mr. Schloss said that worldwide, Ford’s pension plans remained underfunded by $9 billion as of Dec. 31, “unchanged from the year-end 2013 despite significantly lower discount rates, down 80 basis points in the U.S. and about 100 basis points in non-U.S. markets.”
Mr. Schloss added that 2014’s lower discount rates were “offset by strong asset returns, contributions and favorable exchange. These results are clear evidence that our derisking strategy is working.”
Ford’s U.S. defined benefit plans returned 16.4% while non-U.S. plans returned 15.7%, Mr. Schloss said on the conference call, “reflecting fixed-income gains as interest rates fell, as well as strong growth asset returns.”
Ford’s investment staff increased the allocation to fixed-income securities in its U.S. defined benefit plans to 77% as of Dec. 31, up from 70% the prior year, as part of reaching the “objective of reducing funded status and volatility,” Mr. Schloss said.
Ford’s U.S. defined benefit plans were 97% funded at year-end.
Karl Henkel, a Ford spokesman, said Ford’s worldwide defined plan assets as of Dec. 31 totaled $71 billion, of which $45 billion was in the U.S. plans.
Source: Pensions & Investments