Reply #13: Pension Funds Beg Congress to Suspend Billions in Contributions

[ozymandius]

Dec. 8 (Bloomberg) -- Pension funds at Pfizer Inc., International Business Machines Corp., United Parcel Service Inc. and dozens of other companies have joined the parade of businesses seeking relief from Congress amid this year’s economic meltdown.

Instead of money, they want legislation to suspend a federal law that would make them pump billions of dollars into retirement plans to offset stock-market losses as many struggle to find enough cash just to stay in business. They’re pressing Congress to consider the issue this week before this year’s session adjourns.

About 800 companies in the Standard & Poor’s 1500 Index have pension funds, and they were collectively $280 billion short of the sums needed to pay projected benefits as of Nov. 30, according to a study by New York-based benefits consulting firm Mercer LLC. Those 800 funds started the year with a $60 billion surplus, Mercer estimated.

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Previously, plans generally had to have about 90 percent of what they needed to meet future obligations. At the end of this year, the new threshold will be 92 percent. By the end of 2011, the law requires 100 percent funding. Companies that don’t reach a given year’s threshold can be required to immediately jump to full funding. Plans falling below 80 percent funding may face added limits on actions that would further drain assets, such as some lump-sum payments.

About half of the 800 companies in Mercer’s study are in danger of missing this year’s target, Mercer analyst Adrian Hartshorn says. World markets have been so volatile, though, that the outlook may change significantly -- for better or worse -- before year’s end, Hartshorn says.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aBAw1CQXcZMg&refer=exclusive