On April 23, 2013, Tristan Lejeune writes in Employee Benefit News:
The largest employer contributions to pension plans in five years weren’t enough to cover defined benefit liabilities in 2012, according to research released this morning by Towers Watson. An analysis of the 100 largest U.S. pension sponsors finds that their collective funding status fell for the second consecutive year.
Towers Watson reports that employers contributed $45.1 billion to their pension plans last year, up from $38.9 billion in 2011. Companies contributed more than twice the amount of benefits accrued last year in order to keep funding levels up, but it wasn’t enough: pension deficits jumped 17%, or $42.5 billion, to $295.2 billion at year-end 2012.
The average funding ratio declined to 77%, a two-point drop, from the end of 2011 to the same time last year. Plan assets increased 6%; liabilities grew 8%. The TW analysis cited falling interest rates as the primary reason for record-high liabilities.
“Buoyed by the stock market and large contributions, employers have rebuilt their pension plan assets to a point before the 2008 market collapse,” says Alan Glickstein, a senior consultant at Towers Watson. “However, that has been more than offset by growth in liabilities. Four consecutive years of declining interest rates have helped push liabilities 40% higher and left companies with even larger deficits than before.”
This is further evidence of the demise of the pension plan for workers. This will have a significant impact on the financial security of average Americans.
A new paradigm is the subject of the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797 and is founded on the concept of Monetary Justice (http://capitalhomestead.org/page/monetary-justice).
A Petition to reform the Federal Reserve to provide capital credit to ALL Americans can be supported at http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687. The proposed Capital Homestead Act (http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm) would accomplish the necessary reforms.
