Large Co. Pensions Gave Back an Average 32% in 2008

February 13, 2009 ( - Pension funds at large U.S. companies finished a dismal 2008 with an average 32%, or a total $445 billion, loss in their funded status, according to a new Watson Wyatt report.

A Watson Wyatt news release said data from 450 Fortune 1000 companies shows an average 2008 slide from 106% at year-end 2007 to 74% a year later. That wiped out a $78-billion 2007 surplus and left the companies with a combined $366-billion deficit.

Watson Wyatt said that in 2008, plan assets fell a total of 24% and that since October this fall has been compounded further by rising liabilities.

“Changes in funded status are wreaking havoc with the projections companies have made,” said Alan Glickstein, senior retirement consultant at Watson Wyatt, in the news release. “Large and unexpected pension contributions will require companies to divert funds they had earmarked for other business activities into their pension plans precisely when they can least afford it.”

At the end of 2007, 46% of plan sponsors realized funding levels between 90% and 110% and only 5% had levels between 50% and 70%. In contrast, Watson Wyatt estimates that only 5% of plan sponsors will have funding levels between 90% and 110% percent at the end of 2008, and that funding for 61% of sponsors will fall between 50% and 70%.

More information is available  here .