Underfunding in the nation's single-employer pension plans insured by the PBGC dropped a whopping 56% to $31 billion in 1994, mostly due to higher interest rates, the agency reported today. The decrease, from $71 billion in 1993, was the first decline in 11 years.
In addition to favorable interest rates, companies contributed about $12 billion more than required in 1994, bumping funding ratios for underfunded plans to 87% from 82% in 1993. More than 83% of the $12 billion contribution came from General Motors Corp.'s stock/cash contribution. About 20% of pension underfunding came from the steel industry. The auto industry, which made up about 33% of the underfunding in 1993, accounted for less than 5% in 1994.
Bell Atlantic Corp.'s three largest shareholders - the California Public Employees' Retirement System, the New York State Teachers' Retirement System and the New York State and Local Retirement Systems are urging the company to quickly resolve a contract dispute with the Communication Workers of America, the company's largest labor union. Bell Atlantic's ``hard bargaining and the threatened strike might result not only in a short-term decline in the price of the stock ... but a demoralized work force and reduced productivity and shareholder returns in the future,'' said CalPERS CEO James E. Burton in a letter to Bell Atlantic Chief Executive Raymond W. Smith.