U.S. companies lost more than $70 billion in the first quarter because of pension plan losses tied to market declines, according to estimates by Mercer. Mercer estimated that S&P 1,500 companies with pension plans had combined unfunded liabilities of around $20 billion as of March 31, compared to a net surplus of $120 billion on Oct. 31, Adrian Hartshorn, principal and a member of Mercer’s Financial Strategy Group, said in a news release.
“The reality is that the accounting cost understates the true cost of settling the plan liabilities, so the real deficit is much higher,” Mr. Hartshorn said in the release. The extent of the losses will not be included in earnings reports this year because pension costs are usually determined by using market data at the end of the prior report period, meaning 2008 pension expense will be based on Dec. 31 data.
