Tags: S&P 500 | 355 billion | pension | shortfall

S&P 500 Companies Face $355 Billion Pension Shortfall

By    |   Monday, 23 Jul 2012 09:45 AM

Pension funds have not exactly been blowing it out of the water with their investment returns in recent years. So it is not too surprising to learn that corporate pension shortfalls have risen to an all-time high.

Companies in the S&P 500 reported total pension assets of $1.32 trillion in their most recent fiscal year compared with obligations of $1.68 trillion, according to a new S&P report obtained by The New York Times.

That leaves a record shortfall of $355 billion. Leading the way was General Electric Co., with a deficit of $21.6 billion. Six other companies reported shortfalls of more than $10 billion: AT&T Inc., The Boeing Co., Exxon Mobil Corp., Ford Motor Co., IBM Corp. and Lockheed Martin Corp.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

Only 18 companies have their pensions fully funded. JPMorgan Chase & Co. was the most over-funded–to the tune of $1.6 billion, The Times reported.

For many companies, the main cause of the underfunding appears to be the performance of the markets, not a failure to make contributions to the plans.

The ever-expanding shortfall for most companies and their shift to defined contribution plans from defined benefit plans does not bode well for many older members of the workforce.

"The American Dream of a golden retirement for baby boomers is quickly dissipating," Howard Silverblatt, a senior S&P analyst and author of the report, told the Los Angeles Times.

"Plans have been reduced and the burden shifted, with future retirees needing to save more for their retirement. For many baby boomers it may already be too late to safely build up assets, outside of working longer or living more frugally in retirement."

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.



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