Tags: pension | shortfalls | record | S&P

Corporate Pension Shortfalls Hit Record High

By    |   Thursday, 01 August 2013 10:28 AM

The pension funds of companies in the Standard & Poor's 500 Index reached an all-time high level of underfunding last year, according to a study from S&P Dow Jones Indices.

The underfunding reached $451.7 billion, up $97 billion, or 27 percent, from 2011.

Pension plans rely on bond interest payments for much of their income, and the near-record-low levels of interest rates put a serious damper on that income last year.

Editor's Note:
This Wasn’t an Accident — Experts Testify on Financial Meltdown

"The double-digit equity gains of 2012 were no match for the artificially low interest rates," Howard Silverblatt, senior index analyst at S&P Dow Jones Indices and author of the report, said in a statement.

For people working at S&P 500 companies, it's a case of good news/bad news, he noted.

"The good news for current retirees is that most S&P 500 big-cap issues have enough cash and resources available to cover the expense" of their pensions, Silverblatt explained.

"The bad news is for our future retirees, whose benefits have been reduced or cut and will need to find a way to supplement, or postpone, their retirement."

Surprisingly enough, despite the shift to 401(k) plans from traditional retirement plans in recent years, 91 million workers have traditional plans, compared with 51 million who have 401(k)s, CNBC reported.

Meanwhile, the public sector is having pension problems of its own. The shortfall in 109 of the country's state pension plans soared 21 percent last year to $834 billion, according to Wilshire Consulting.

"The financial crisis plus the challenges that state and local governments have had with their own finances have resulted in continued underfunding of the pension plans," Verne Sedlacek, CEO of Commonfund investment firm, told CNBC.

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown

© 2020 Newsmax Finance. All rights reserved.


   
1Like our page
2Share
InvestingAnalysis
The pension funds of companies in the Standard & Poor's 500 Index reached an all-time high level of underfunding last year, according to a study from S&P Dow Jones Indices.
pension,shortfalls,record,S&P
297
2013-28-01
Thursday, 01 August 2013 10:28 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved