S&P 500 defined pensions remain underfunded by $245 billion, depsite slight growth in 2010.
Additionally, OPEBs remain severely underfunded at $210 billion.
The combined assets S&P 500 companies set aside in 2010 to fund pensions and OPEBs amounted to $1.34 trillion, covering $1.79 trillion in obligations with the resulting underfunding equating to $455.1 billion, or a 25.5 percent funding rate.
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Desipte a 15 percent equity return and a market recovery of more than 45 percent over the past two years, S&P 500 companies could not fix the underfunded pension, according to Howard Silverblatt, S&P Senior Index Analyst and author of the report "S&P 500 2010: Pensions and Other Post Employment Benefits (OPEB)".
Silverblatt added that, because of the record pension recovery in 2010, companies are in a much better position to handle corporate pensions, which are a manageable expense.
According to the report, estimated pension return rates declined for the 10th consecutive year, dropping to an estimated 7.73 percent in 2010 versus 7.83 percent in 2009. Discount rates declined 50 basis points, increasing projected obligations.
The S&P Indices report also reviewed the status of Other Post Employment Benefits (OPEB). Within the S&P 500, 296 companies offered OPEBs in 2010. Only $64.5 billion of the $274.1 billion in OPEB obligations was funded, representing a 23.53 percent funding status. This is far behind the funding status of pensions, which is 83.9 percent.
"The American dream of a golden retirement for upcoming baby boomers is quickly dissipating," Silverblatt said. "The current underfunded situation leaves few options for a comfortable retirement, and few years for baby boomers to significantly add to their retirement resources…outside of working longer."
| S&P INDICES PENSION REPORT | ||||||||
| S&P 500 2010 PENSION STATUS REPORT: HISTORICAL PENSION DATA | ||||||||
| S&P 500 | PENSION | PENSION | PENSION | PENSION | PENSION | PENSION | S&P 500 | |
| ASSETS | OBLIGATIONS | FUNDING | FUNDING | DISCOUNT | RETURN | TOTAL | ||
| $ MILLIONS | $ MILLIONS | STATUS | STATUS | RATE | RATE | RETURN | ||
| $ MILLIONS | RATIO | |||||||
| 2010 | $1,273,321 | $1,518,314 | -$244,993 | 0.839 | 5.31% | 7.73% | 15.06% | |
| 2009 | $1,160,202 | $1,420,912 | -$260,709 | 0.817 | 5.81% | 7.83% | 26.46% | |
| 2008 | $1,100,149 | $1,408,580 | -$308,432 | 0.781 | 6.29% | 7.95% | -37.00% | |
| 2007 | $1,504,516 | $1,441,135 | $63,380 | 1.044 | 6.13% | 8.02% | 5.49% | |
| 2006 | $1,470,964 | $1,511,301 | -$40,337 | 0.973 | 5.75% | 8.03% | 15.79% | |
| 2005 | $1,318,010 | $1,458,439 | -$140,430 | 0.904 | 5.11% | 8.13% | 4.91% | |
| 2004 | $1,265,338 | $1,429,667 | -$164,328 | 0.885 | 5.80% | 8.27% | 10.88% | |
| 2003 | $1,113,478 | $1,278,265 | -$164,787 | 0.871 | 6.09% | 8.38% | 28.69% | |
| 2002 | $950,963 | $1,169,472 | -$218,509 | 0.813 | 6.64% | 8.63% | -22.10% | |
| 2001 | $1,089,896 | $1,086,950 | $2,946 | 1.003 | 7.13% | 9.15% | -11.89% | |
| 2000 | $1,238,920 | $1,012,893 | $226,027 | 1.223 | 7.43% | 9.17% | -9.10% | |
| 1999 | $1,274,083 | $994,061 | $280,022 | 1.282 | 7.44% | 9.13% | 21.04% | |
| 1998 | $1,144,454 | $1,018,479 | $125,975 | 1.124 | 6.72% | 9.06% | 28.58% | |
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