Front page, USA Today, “More companies freeze pensions“:
Severe investment losses in 2008 shrank the assets of the nation’s largest pension plans to 79% of projected liabilities, down from 109% at the end of 2007, according to an analysis by Watson Wyatt. Companies, already hurting in the weak economy, have to increase contributions to make up the difference, and are facing stricter federal requirements about funding the plans.
More companies will freeze their pension plans unless Congress temporarily relaxes the funding requirements, says Dena Battle, director of tax policy for the National Association of Manufacturers. “When your funding obligations triple and you don’t have the cash to deal with that and you don’t get relief from Congress, you have to make hard choices,” she says.
In December, more than 400 trade associations, businesses and others sent a letter to Congress asking for legislation to recognize the recession’s impact on pension contributions. (Copy of the letter here.) The stimulus bill contained some useful provisions, but more is needed to support pensions for employees while also ensuring the ability of companies to make investments elsewhere.
The Watson Wyatt report referred to above is discussed in this news release, “U.S. Pension Plan Funding Plunged by More Than $300 Billion in 2008, Watson Wyatt Analysis Finds”
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