(January 13, 2010) — Last year’s improvement in financial markets helped remedy the damage on U.S. pension funds, possibly adding $180 billion to companies’ balance sheets, a survey showed.
According to Mercer, a benefits consulting firm, U.S. pension funds were 85% funded with a deficit of $229 billion at the end of December compared with 75% and a $409 billion deficit a year earlier.
“This will be welcome news for plan sponsors. Over two-thirds of U.S. companies have a financial year-end of December 31,” Adrian Hartshorn, a member of Mercer’s Financial Strategy Group, said in a press release. The improved funded status of pension plans will improve earnings and reduce the need for future cash contributions, he added.
With increasing reliance on equity markets, Mercer also warned funds are especially vulnerable to volatility. U.S. pension funds have had 19 consecutive months of deficit, since May 2008, the survey showed.
To contact the <em>aiCIO</em> editor of this story: Kristopher McDaniel at <a href='mailto:kmcdaniel@assetinternational.com'>kmcdaniel@assetinternational.com</a>