Gloom Lifting for Pension Plans
A $220-BILLION-PLUS weight could be lifting -- at least a bit -- off the stock market.</br></br>Thanks to a drastic turnaround in interest rates and improved stock- market returns, the prognosis for the health of corporate pension plans isn't quite as gloomy as many investors feared just weeks ago.</br></br>In recent months, many analysts and investors have focused on the combination of falling interest rates, which had sharply boosted the present value of what companies owe current and future pensioners, and three years of miserable stock-market performance, which had sharply depressed the assets in the plans.</br></br>"Everybody talked about the perfect storm," says Jack Ciesielski, editor of Analyst's Accounting Observer newsletter in Baltimore.</br></br>And the storm seemed poised only to worsen. As recently as mid-June, Standard & Poor's cautioned that the underfunding of pensions in its S&P-500 stock index had jumped, in less than six months, an additional 7% -- to $226 billion from $212 billion at year end. That year-end figure represented a big reversal from the year before (2001), when there was a $5 billion surplus.