America's largest companies do not fund or largely underfund their retiree health plans, according to a recent survey by Watson Wyatt Worldwide, a New York-based healthcare industry consulting firm.
Only 20% of the 612 companies in the Fortune 1000 that were polled pre-fund any healthcare benefits for retirees. Few of those completely fund such benefits.
On average, just 25% of the projected obligation was funded last year, compared with 24% in 1996. By contrast, projected pension plan obligations were vastly overfunded, with the participants having on hand an average 113% of the funds required to meet liabilities.
Watson Wyatt concluded that the structure of corporate tax laws and a lax attitude toward underwriting retiree benefits are among the reasons the benefits were consistently underfunded by the companies.