For individual companies, the gap can be large.
General Motors Co. has the biggest difference. In 2014, GM contributed $913 million to its pension plans, while paying out $7.4 billion.
GM's funded status worsened to 76.7% at yearend 2014 from 80% in 2013. While its total plan assets in 2014 were $80.4 billion, up from $79.1 billion in 2013, its plan liabilities rose more to $104.8 billion from $99 billion.
“We don't expect (to make) a significant mandatory contribution for the next five years,” said Tom E. Henderson, GM spokesman.
AT&T Inc. has the second-biggest gap, contributing $562 million, while paying out $6.5 billion in pension benefits.
AT&T's funded status worsened to 75.6% at year-end 2014 from 83.5% in 2013. Its total plan assets in 2014 were $45.1 billion, down from $47.2 billion, while its liabilities rose to $59.5 billion from $56.5 billion.
“In 2013, we voluntarily contributed a preferred equity interest in AT&T Mobility to our pension fund,” McCall Butler, AT&T spokeswoman, said in an e-mail. “This includes an annual cash dividend of $560 million, and a commitment to contribute an additional $700 million” in total through 2017.
“When you include the $9 billion value of the preferred equity interest in AT&T Mobility that we contributed to the pension fund in 2013, more than 90% of our pension is funded,” Ms. Butler said, although she added the Mobility stake, while included under ERISA rules, is not included under accounting rules in AT&T's pension assets in its 10-K.
“As legally required, we will continue to fund our plan consistent with these commitments and to maintain the ERISA required funding levels.
“We're comfortable with our current level of funding and the contributions we'll make through 2017,” Ms. Butler said.
Mr. Hackel said, “companies cannot continue to have a multiple of benefit payments over employer contributions (and) continue to lower their cash contributions,” worsening funding levels.
“They have been able to capitalize on the very big (equity) market we've had the last four years,” Mr. Hackel said. He added that the stock market rise could “turn around, which it mostly will now that the Fed (could start) to raise rates. These contributions have got to rise very substantially, double if not triple.”
As the pension plan funding relief phases out, the “impact to operations is going to be substantial,” Mr. Hackel said. “Larger pension contributions impact the financial structure” of corporations. “Stepped-up contributions to plans ... reduce a company's financial flexibility. It impacts their cash flows. It filters down to every phase of the companies' business.
“Absolutely it will hurt both the income statement and will change the (price/earnings) multiple and will also change the operating cash provided by the firm,” Mr. Hackel said.
“People think that, unfortunately, pensions (defined benefit plans) are a thing of the past,” Mr. Hackel said. “But they are not going away. They are not going away for many, many years. Twenty years from now they will have an impact on many of these companies. People are living longer.
“The health of the plan is the health of the plan, and nothing that Congress implements will change that,” Mr. Hackel said. “That doesn't change the necessity of funding” the plan.
Mr. Hackel didn't have an estimate of the impact on corporate income or stock valuation from an increase in contributions.