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Practice Management > Building Your Business

Consultants Say Most Domestic Pension Funds Are Healthy

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Pension experts at the consulting arm of Watson Wyatt & Company Holdings and Aon Corp. say policymakers may be exaggerating the extent of funding problems at defined benefit pension plans.[@@]

About 50% of the pension plans at Fortune 1000 companies pose little risk to the stability of the companies’ core businesses, and only about 20% of the plans appear to expose the core businesses to relatively high risk levels, according to consultants at Watson Wyatt, Washington.

Shaky employers with “junk bond” credit ratings appear to be responsible for only about 16% of total pension risk, the Watson Wyatt consultants estimate.

Meanwhile, consultants in Aon’s London office estimate that 20% of U.S. defined benefit pension plans are fully funded and that only 5% have deficits representing more than 2 years of profits.

In the United Kingdom, where the law requires employers to adjust pension benefits payments for inflation, only 5% of plans are fully funded and 25% have deficits big enough to consume 2 years of profits, the Aon consultants estimate.


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