BETHESDA, Md. — Three-quarters of the nation's largest corporate pension plans could cut their equity exposure while half would double or triple their bond duration if a series of accounting, regulatory and legislative proposals is adopted, the Committee on Investment of Employee Benefit Assets warned in a new study.
The cumulative effect could be sharp declines in the U.S. stock market, trimmed real economic growth and short-term job losses.
The study also predicted that roughly half of the big corporate funds must reduce pension benefits if the proposals are adopted, with many expected to freeze accruals on existing defined benefit plans or require new hires to join defined contribution plans, the study found.
CIEBA members invest $1 trillion in pension assets and their plans comprise more than one-quarter of Americans covered by defined benefit plans.
Officials of CIEBA, a committee of the Association for Financial Professionals, plan to take their message to Congress and regulators. They hope to convene a forum of key policy-makers, plan sponsors and participants to address these issues, said T. Britton Harris, CIEBA vice chairman and president of Verizon Investment Management Corp., which manages $65 billion, mostly for the Verizon Communications Inc. retirement plans.