Tags: Corporate | pension | deficit | shortfall

WSJ: Corporate Pension Deficits Soar to $440 Billion

By    |   Thursday, 01 Dec 2011 01:23 PM

The huge pension shortfalls for government workers have received plenty of attention, but pension deficits for major companies are growing too.

The gap between assets and liabilities for the 100 largest corporate pension plans in the country totaled $440 as of Sept. 30, more than doubling from $186 billion three month earlier, according to Milliman actuarial firm, The Wall Street Journal reports.

That represents the second biggest increase in percentage terms ever. It was topped only in the fourth quarter of 2008, following Lehman Brothers’ collapse.
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The widening deficit stems from the stock market’s weak performance during the third quarter and the continued decline of interest rates.

Falling stock prices lessen the value of fund assets, and falling interest rates increase their liabilities, due to the complicated way liabilities are calculated.

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 (Getty Images photo)
The soaring shortfalls are forcing companies to shift cash to their pension funds.

To be sure, the impact of the deficits is much smaller than it would have been years ago, as only 14 percent of private sector workers still have some kind of defined-benefit pension plan, according to the Employee Benefit Research Institute. Most workers just have 401ks.

The problem is more severe for state and local government workers’ pension plans.

That’s because those governments don’t have the cash to put in their plans that companies do. So some public pension funds are investing in risky assets to juice their returns.

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The huge pension shortfalls for government workers have received plenty of attention, but pension deficits for major companies are growing too. The gap between assets and liabilities for the 100 largest corporate pension plans in the country totaled $440 as of Sept. 30,...
Corporate,pension,deficit,shortfall
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2011-23-01
Thursday, 01 Dec 2011 01:23 PM
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