Pension Plans Post First Gain In Funding in Eight Months

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Pension Plans Post First Gain In Funding in Eight Months

By Nancy Trejos
Washington Post Staff Writer
Friday, April 10, 2009; Page A13


The finances of some of the nation's top pension plans, which have been underfunded this year, improved in March for the first time since July, according to a study released yesterday.

In its monthly survey of the nation's 100 largest pension plans, global consulting and actuarial firm Milliman found that funding improved by $48 billion. Nonetheless, these plans, which until last summer had a surplus of funds, were still below the 100 percent funding level they will eventually be required to meet by law.

Another study, released earlier this week, also found an improvement in the funding status of the nation's largest retirement programs. Pension plans at Standard and Poor's 1500 companies had a $158 billion improvement in funding in March, according to Mercer, a benefits consulting company. Despite that gain, the plans had a $215 billion deficit at the end of March. Pensions were 83 percent funded.

Until mid-2008, the largest pension plans were overfunded. But dramatic stock market declines left pension funding in the mid-70-percent range for much of this year. Pensions, also known as defined benefit plans, are heavily invested in the stock market. If the market falls, causing a drop in funding, companies have to pump more money into the retirement plans. Companies called it yet another burden they have to face in this economic downturn.

"It's the first positive sign that plans have seen since the real impact of the credit crunch hit pension plans at the end of last year," said Adrian Hartshorn, a member of Mercer's Financial Strategy Group, which helps companies manage financial risk in their retirement plans.

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http://www.washingtonpost.com/wp-dyn/content/article/2009/04/09/AR2009040904065.html