Employer DB Contribs Could be $146B by 2011

October 7, 2009 (PLANSPONSOR.com) - U.S. employers will be required to contribute $89 billion into their defined benefit (DB) plans in 2010 and more than $146 billion in 2011 unless they get funding relief, according to a new study.

A Watson Wyatt news release said its analysis of existing law and three legislative proposals under consideration found that past relief granted by legislation and regulations had lowered required contributions for corporate pension plans to $32 billion in 2009 from $38 billion in 2008. But without further action, Watson Wyatt said, employers’ contributions will explode to more than $146 billion in 2011.

Under the three legislative proposals, employers’ contributions would be somewhat lower, by $10 billion to $25 billion annually with different time paths, but required contributions would still be very large, according to Watson Wyatt.

The analysis included a House Education and Labor Committee bill, a measure being circulated by U.S. Representative Earl Pomeroy (D-North Dakota) (see Pomeroy Continues Filling Out DB Funding Package Proposal ) and a proposed bill from Representative John Boehner (R-Ohio), the House minority leader (see GOP Congressmen Offer Savings Proposal ).

Without additional funding relief, the average regulatory funded status would decline slightly from 96.4% in 2008 to 93.8% in 2009, and then fall to 83.8% in 2010 and to 76.8% percent in 2011, the analysis found.

“The combination of a deep recession and new pension law has landed employers in extraordinary circumstances, and they need temporary funding relief to lessen the enormous pension contributions required in the next few years,” said Mark Warshawsky, director of retirement research at Watson Wyatt, in the news release.

More information is available here .  Warshawsky’s recent Congressional testimony about the issue is available here .