The Bloomberg News September 14, 2010, article discusses how corporate pension plans in the U.S. are falling behind future payouts to retirees by the most in a decade amid a slowing economy and the lowest bond yields on record.
In the article, Kenneth Hackel, president of credittrends.com and research and consulting firm CT Capital likens the shortfall to a ‘silent heart attack’. He believes “People aren’t recognizing the symptoms until the patient falls on the ground.”
The article quotes a recent Milliman report that contributions to the 100 biggest corporate pension plans increased to $54.5 billion in 2009 from $29.5 billion the previous year and compares with an average of $38.7 billion for the prior five years.
“It’s a major, major hit for companies to take,” said Hackel of Alpine, New Jersey-based CT Capital. “Sponsors are going to need to step up their contributions massively.”
Related articles:
- Pensions – Many Won’t Be As Lucky As Heinz (HNZ)
- GM: Who’s Next? Answer: At Least 1,300 More
- What Investors Don’t Understand About Pension Plans
- Pension Facts: Why The Hit to Earnings and Cash Flow Is Upon Us
- IBM – Again, Pension Underfunding a Leading Indicator
- CNBC Strategy Session – Underfunded Pensions Earnings Bombshell
- With 3-, 5-, and 10-Year Stock Returns Negative: Why Are Pension Funds Assuming 8% Returns?
Disclosure: No positions
Kenneth S. Hackel, CFA
President
CT Capital LLC
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