S&P 500 companies' pension plans could have a combined $245 billion shortfall by the end of this year — their worst funding level in a decade, according to a new report by David Zion, Credit Suisse First Boston analyst. Mediocre returns on pension assets have not kept pace with the increase in liabilities, accounting for the rise in underfunding, the report said. Mr. Zion expects pension assets to increase just 1% in 2004, to $1.08 trillion, based on an average asset allocation of 65% equity and 35% fixed income, while liabilities should increase slightly to $1.33 billion from $1.31 billion last year. Mr. Zion's report also projects that the number of companies with pension surpluses will drop to 24 this year, from 50 in 2003 and 35 in 2002. Also, the number of underfunded plans will climb to 340 at the end of 2004, from 320 in 2003. General Motors Corp. tops the list of the 10 companies that could report the biggest dollar decline in their pension plans this year, followed by Ford Motor Co., IBM Corp., General Electric Co. and Verizon Communications, according to Mr. Zion's projections.