US - The steep drop in the markets in 2008 wiped out five years of gains in the pension plans of the 100 largest corporate defined benefit (DB) plan sponsors, Milliman research reveals.
Milliman principal John Ehrhardt said: "Asset losses drove a decrease in funded status from about 106% at the end of 2007 to less than 80% at the end of 2008. Losses continued into 2009 with more than a $30 billion decrease in funded status in the first two months."
He added: "At the end of February, the funded status of the Milliman 100 pension plans stood at 74%, the lowest level since May 2003."
Milliman expects the drop in funded status to result in pension contributions and charges of some $70bn combined.
The firm expects companies to contribute $50bn in 2009 compared to $29.7bn the previous year. The sharp increase is due partly because of the drop in funded status and in part because of changes in funding regulations.
Milliman also said the allocation to equities declined to 44% in 2008, down from 55% the previous year.
Evaluation Associates senior consultant and co-author Paul Morgan said: "The decrease in equity allocations is primarily due to market declines and, to a much lesser extent, a change in investment policies.
"A return to a 55% equity allocation by the end of 2009, either through new investments or portfolio rebalancing, would require a $100 billion investment in the equity markets."
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