Fidelity Contributes to Underfunded Pension

February 24, 2003 ( - Mutual fund company Fidelity Investments contributed $53.19 million to its employee pension plan in 2002, as the downturn in the stock market rocked the plan.

The privately held Fidelity disclosed its employee pension plan was underfunded by $415.4 million at the end of the year. The plan, which paid out $1.9 million in benefits in 2002, had assets of $374.6 million at the end of 2002, while the total projected benefit obligation was $790 million.   However executive for the Boston-based company were confident Fidelity would easily cover current pension benefit obligations for a work force that is relatively young, according to a Reuters report.

Annual Report

The report came as the mutual fund company announced a slew of losses for the year.   In the company’s annual report, it was announced net income plunged 39% last year and that profit fell to $808.2 million in 2002 from $1.32 billion in 2001.  

The drop is being attributed to the continued slide in the stock market diminishing investment and retirement accounts in conjunction with highly publicized corporate scandals that has left many investors on the sidelines nervous about contributing to mutual funds.   Evidence of this decline is Fidelity’s average assets under management, down 7% in 2002 to $819.9 billion.

Overall, the company’s total revenue slid 9% to $8.9 billion on lower equity asset levels and lower trading-related volumes.   Total net inflows into Fidelity Brokerage Co funds declined sharply last year to $25.8 billion, or 38%, compared with net inflows of $41.6 billion in 2001.

However despite the declines, Fidelity’s balance sheet remains healthy.   “You can see from our balance sheet we’ve increased our liquidity position up to about $6 billion and our total stockholders’ equity to about $7 billion,” said Stephen Jonas, Fidelity’s current chief administrative officer.