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Mix-Ansicht- US Pensionfund-Lücke: Merrill Lynch - 98% der S&P-Gesellschaften underfunded - Popeye, 06.10.2002, 20:00
- Re: US Pensionfund-Lücke: Merrill Lynch - 98% der S&P-Gesellschaften underfunded - Emerald, 06.10.2002, 21:15
US Pensionfund-Lücke: Merrill Lynch - 98% der S&P-Gesellschaften underfunded
-->Huge Pension Fund Hole To
Hit S&P 500s In 2003
By Thi Nguyen
9-28-2
NEW YORK (Reuters) - Stocks slumping for the third
straight year will leave large portions of the pension funds of
hundreds of top U.S. companies underfunded at the end of
2002, investment bank Merrill Lynch & Co.
(NYSE:<http://finance.yahoo.com/q?s=mer&d=t>
MER - <http://biz.yahoo.com/n/m/mer.html>News) said.
These companies, which include General Motors Corp.
(NYSE:<http://finance.yahoo.com/q?s=gm&d=t>GM -
<http://biz.yahoo.com/n/g/gm.html>News) and some other
big names in the broad Standard & Poor's 500 index
(CBOE:<http://finance.yahoo.com/q?s=%5espx&d=t>
^SPX - <http://biz.yahoo.com/n/_/_spx.html>News), will
take a hit to their 2003 cash flow and earnings as they will be
forced to contribute billions of dollars to their pension plans
-- waylaid by the stock market's spectacular decline since
2000 -- to comply with U.S. laws that protect employee
retirement funds.
Merrill Lynch estimates that the traditional pension funds,
also known as defined benefit plans, for 98 percent of 346
S&P 500 companies are expected to be underfunded at the
end of 2002. Those companies make up 70 percent of the
S&P 500.
On aggregate, the pension funds of these 346 companies are
expected to be underfunded by $640 billion -- or 69 percent
of the total assets in their pension plans, according to a
Merrill Lynch analyst's study.
Excluding post-retirement funds, pension funds are
underfunded by $323 billion at the companies, a sharp drop
from an overfunded position of $0.5 billion at the end of
2001, the investment bank said.
At the end of 2000, the reverse was true: The funds were
overfunded by $215 billion.
So far this year, the S&P 500 has fallen 28 percent. It has
tumbled about 46 percent from its all-time high reached in
March 2000. Among the stock slide's biggest victims were
pension funds, which typically invest a large portion of their
cash in stocks.
A BRUTAL REALITY CHECK
Even as the U.S. stock market suffers its third straight year of
heavy losses, S&P 500 companies currently still assume that
their long-term returns on pension fund investments will be
9.3 percent, according to Adrian Redlich, director of Merrill
Lynch's global analytic and thematic research.
The expected returns on plan assets, however, will likely fall
to between 8 percent and 8.5 percent, Redlich said.
"Indicatively, these changes could lead companies and
analysts to downgrade earnings, over the coming six months,
by 5 to 10 percent," Redlich wrote in a research note.
Cash flow and earnings in large companies, especially major
industrial manufacturers with big labor forces and huge
pension plans, will be hurt the most by pension issues,
according to Standard & Poor's Corp., a financial services
and information company owned by The McGraw-Hill Cos.
(NYSE:<http://finance.yahoo.com/q?s=mhp&d=t>MHP -
<http://biz.yahoo.com/n/m/mhp.html>News)
Among the most underfunded companies in absolute terms
for pension and post-retirement plans are GM and Ford
Motor Co.(NYSE:<http://finance.yahoo.com/q?s=f&d=t>F -
<http://biz.yahoo.com/n/f/f.html>News), the world's top
automakers; International Business Machines Corp.
(NYSE:<http://finance.yahoo.com/q?s=ibm&d=t>IBM -
<http://biz.yahoo.com/n/i/ibm.html>News), the world's largest
supplier of computers and computer services; SBC
Communications Inc.
(NYSE:<http://finance.yahoo.com/q?s=sbc&d=t>SBC -
<http://biz.yahoo.com/n/s/sbc.html>News), the No. 2 U.S.
local phone company, and The Boeing Co.
(NYSE:<http://finance.yahoo.com/q?s=ba&d=t>BA -
<http://biz.yahoo.com/n/b/ba.html>News), the world's largest
maker of commercial jets.
Merrill's estimates are based on the assumption that the actual
return on plan assets will be a negative 10 percent this year,
and that company contributions and benefits paid this year
are in line with 2001 payouts.
<ul> ~ http://www.rense.com/general29/sdhu.htm</ul>
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