Pensions and benefits.

• Position: From the Library

"America's Pension Funding Crisis: The Perfect Storm"

Charles Ruffel and Nevin Adams

Plan Sponsor, November 2002, pp. 92-9 6.

In the past three years, corporations and governments managing defined benefit retirement plans have been badly hurt by the escalation of funding liabilities at the same time that their investment portfolios have declined in a dramatic fashion. One investment firm expects that 2002 will be the worst year "on record" in terms of liabilities outpacing asset growth (liabilities grew faster than assets by 36.5 percent at the time the article was published). Even so, a Fidelity/Plan Sponsor survey shows that few public plans and even fewer corporate plans are funded below 84 percent of full funding. One response to the situation might be to change asset allocation strategies, but the authors note that most pension plans are holding firm to their equity-heavy asset...