Wednesday, February 18, 2009

News You Can Use: Pension funding remains low

As another cringe-worthy sign of the times, a new Mercer data on Fortune 1500 companies show pension plan funded status at the end of Jan was unchanged from Dec., indicating funded status of plans sponsored by the largest U.S. companies remained at 75%.

Don’t hold your breath; it gets worse.

The value of both pension assets and liabilities declined in Jan, reducing the dollar amount of the estimated aggregate deficit to $380 billion from $409 billion at the end of Dec.

A Watson Wyatt survey also released today examined the pension problem over the course of 2008, finding that pension plan funding at the largest U.S. companies had reached historical lows at the end of the year.

Watson Wyatt measured the aggregate data of 450 Fortune 1000 companies, forecasting an average decline of 32% (106% in 2007 to 74% in 2008). This translates to a $445 billion total loss, annihilating a $78 billion surplus in 2007 and leaving these companies with $366 billion deficit to clean up.

Perhaps the only good news is for DC plan sponsors, and only in a misery-loves-company kind of way. --Kathleen Koster

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