S&P 500 companies could see record underfunding for their defined benefit plans in 2008 because of poor stock market performance, according to a news release from Standard & Poor's Index Services.
The companies pension funds will be underfunded on an aggregate basis by $257 billion (or 17.9%), according to S&P data and estimates, surpassing the aggregate $219 billion underfunding in 2002.
The plans were overfunded by $63.4 billion in 2007, the first surplus year since 2001.
While assets will decline, S&P expects pension liabilities to fall slightly due to a higher discount rate used in their computation.
"Massive losses in the equity markets will require companies to either sell assets at their depressed levels, or shore up assets with significant cash infusions," Howard Silverblatt, senior index analyst and author of the research, said in the release.