Number of Employers With Large Pension Risk Levels Declined Between 2003 and 2005

WASHINGTON, January 22, 2007 – The number of large employers facing
relatively high degrees of financial risk due to pension liabilities has
declined sharply, according to a Watson Wyatt analysis of FORTUNE 1000
companies that sponsored defined benefit pension plans in 2005. Pension
health will likely continue to improve due to the rise in interest rates
and strong stock market returns in 2006, coupled with new investment
strategies and increased employer funding.

Watson Wyatt’s analysis found that pension plan liabilities posed
relatively high amounts of financial risk for only 9 percent of companies,
down from 17 percent in 2003 – a decline of about half over three years.
Meanwhile, more pension sponsors experienced relatively low pension-related
risk. Pension liabilities posed scant risk to the core business for 60
percent of plan sponsors, an increase from about 56 percent in 2004 and 51
percent in 2003.

Watson Wyatt’s Pension Risk Index, on which the findings are based,
quantifies the amount of financial risk a particular company’s pension fund
imposes on its core business. The analysis measures the potential dollar
value decline in a pension plan’s funded status (reflecting both plan
assets and liabilities) under an adverse financial market scenario. The
potential drop in funding is then compared with the sponsoring company’s
market value.

“Thanks to a sound economy and considerable corporate contributions,
America’s pension plans are generally on firmer financial footing than they
were two years ago,” said Mark Warshawsky, director of retirement research
at Watson Wyatt. “With anticipated improvements in pension plan funding due
in part to new rules and reductions in pension risk, concerns about the
strength of our pension system should be greatly alleviated.”

A separate Watson Wyatt analysis of pension funding found that the
aggregate funding level for FORTUNE 1000 companies’ pension plans increased
from 82 percent to 92 percent between 2002 and 2005.

Further information on the PRI analysis and pension funding can be found at
http://www.watsonwyatt.com/us/pubs/insider.

About Watson Wyatt Worldwide

Watson Wyatt (NYSE: WW) is the trusted business partner to the world’s
leading organizations on people and financial issues. The firm’s global
services include: managing the cost and effectiveness of employee benefit
programs; developing attraction, retention and reward strategies; advising
pension plan sponsors and other institutions on optimal investment
strategies; providing strategic and financial advice to insurance and
financial services companies; and delivering related technology,
outsourcing and data services. Watson Wyatt has 6,000 associates in 30
countries and is located on the Web at www.watsonwyatt.com.

Contact

Ed Emerman, 609/452-5967, eemerman[at]eaglepr.com
Emily Rieger, 703/258-7634, emily.rieger[at]watsonwyatt.com

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