As the stock market collapse eroded employee pension funds, a consultancy is predicting that the level of contributions will double in 2009.
According to the Milliman 100 Pension Funding Index, net losses of pension funds were $23 billion in January. As of the end of that month, the total asset value for these pensions stood at $923 billion.
John Ehrhardt, co-author of the index, says, "Pensions have lost 30 percent in funding status since the beginning of 2008, and employers may have to double their contributions in 2009."
"After such a brutal year, it is easy to forget that these pensions were 104.9 percent funded to begin 2008," he adds.
Founded in Seattle in 1947, Milliman is one of the largest independent actuarial and consulting firms in the world.
The Milliman 100 Pension Funding Index, which consists of 100 biggest defined benefit pension plans in the U.S., projects the funded status for pension plans, reflecting the impact of market returns and interest-rate changes and utilizing reported asset values, liabilities, and asset allocations of the companies’ pension plans.
A recent survey from the American Institute of Certified Public Accountants indicated that 35 percent of their clients who are approaching retirement age are postponing it due to recent wealth erosion.