Corporate pensions had a flourishing year
Seniorscopie.com, May 28th, 2007
The nation's corporate pension funds had a healthy
2006, doped by stronger-than-anticipated returns from the stock market
and slower-than-anticipated growth in expected payments to retirees.
The
Milliman consulting firm reviewed the 100 biggest companies that offer
pension plans. Those manage $1.3 trillion in pension benefits, about 75
percent of traditional-pension money in the U.S. private sector.
Last
year, experts predicted that the net worth of many companies offering
traditional pensions would fall because of accounting rule changes that
took effect in 2006. The rules require a company to reflect on its
balance sheet the market value of all pension assets and obligations,
rather than just those payouts that affect its earnings for the year.
But
the stock market performed better than expected -- offering average
returns of 12.8 percent, rather than the 8.4 percent the consultants
predicted -- meaning the funds'stated ability to pay future expenses
was not hurt by the new rules as much as was predicted a year ago.
Milliman
actuary Adrien LaBombarde said that on average, "pension funds look
pretty good right now." But he said some companies, especially in the
troubled auto and airline industries, continue to worry the federal
Pension Benefit Guaranty Corp. The PBGC guarantees payouts, up to a
point, for retirees owed money from a failed pension plan.
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