2008 Brought Record Pension Plan Losses, Study Says

An analysis of financial statements filed by sponsors of the 100 largest pension plans found average funding was less than 80 percent at the end of 2008, down from 106 percent a year earlier.

Last year’s financial crisis fueled record losses in the nation’s largest corporate pension plans, Milliman Inc. said in a study released Tuesday, March 24.

Milliman’s analysis of financial statements filed by sponsors of the 100 largest pension plans found the plans’average funding was less than 80 percent at the end of 2008, a steep drop from 106 percent a year earlier.

Combined losses for the top employer-sponsored plans totaled $300 billion for 2008, the report said. Those losses continued this year, with a decline of more than $30 billion in the first two months of 2009. That put the top 100 pension plans’ funded status at 73 percent in February, the lowest level since July 2003, the Seattle-based actuary and consulting firm said.

The losses, combined with stricter federal funding requirements, will result in a significant increase in required contributions, Milliman said. It projects required contributions will rise by $50 billion this year.

In addition, the report said, the funds’ aggregate pension deficit increased by $320 billion during fiscal 2008, compared with a $65 billion surplus in 2007. Combined, the top firms faced an aggregate shortfall of $255 billion at the end of fiscal 2008, Milliman said.

While a 2006 pension funding law was eased somewhat last year, federal legislators have not yet responded to business groups’ pleas for more relaxation of those rules.

The Ninth Annual Milliman Pension Funding Study is available at www.milliman.com.

Filed by Colleen McCarthy of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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