Survey Shows Corporate Pensions Improved in ’09, but Troubles Persist

(February 18, 2010) – A recent report from Bank of America Merrill Lynch shows companies improved pension funding in 2009.

According to the report, multinationals had an aggregate plan deficit of $227 billion last year, down from $295 billion in 2008.

US plans were 84% funded as of December 31. In comparison, non-US plans were 80% funded. At the end of 2009, while companies had $1.198 trillion combined in US pension assets and a deficit of $188.7 billion, their non-U.S. pension assets totaled $189.5 billion, with a deficit of $38.6 billion.

Pre-tax pension expense will likely increase to $42 billion in 2010 from $35 billion in 2009, the report showed. Companies with the largest expected pension expense increase in 2010 include Black & Decker, Boeing, and Lockheed Martin, while firms where pension expenses are expected to decrease the most in 2010 include Aetna, Goodrich and JC Penney.

In terms of dollars, Lockheed Martin had the largest deficit, followed by Exxon Mobil and Ford Motor Co.

On a percentage basis, the report stated that financials, including banks, insurance and real estate, were expected to be the best funded sector as of year-end 2009 at 96% funded, while energy is expected to be the worst funded at 74%.