Its not only State pension funds that are woefully underfunded (like Illinois at 43.4%), many corporate pension funds are worefully underfunded as well.
The biggest offenders? Tech giant Intel and Delta Airlines (that includes the former Northwest Airlines, Western Airlines and parts of Pan American airlines) are the two most underfuded penions at 46.6% and 49.4% underfunded, respectively. So, Intel and Delta Airlines are the Illinois of the corporate pension world.
People who rely on their company pension plans to fund their retirement may be in for a shock: Of the 200 biggest defined-benefit plans in the S&P 500 based on assets, 186 aren’t fully funded. Simply put, they don’t have enough money to fund current and future retirees. The situation worsened for more than half of these funds from fiscal 2015 to 2016. A big part of the reason is the poor returns they got from their assets in the superlow interest-rate environment that followed the financial crisis. It’s left a hole of $382 billion for the top 200 plans.
Of course, the percentage of workers covered by traditional defined benefit plans—those that pay a lifetime annuity, often based on years of service and salary—has been declining for decades as companies shift to defined contribution plans such as 401(k)s. But each time a pension plan is terminated, canceled or altered, thousands of workers are affected.
Last month, the 70,000 participants in the United Parcel Service Inc. pension plan learned they won’t earn increased benefits if they work after 2022. Late last year DuPont Co. announced it would stop making payments into its pension plan for 13,000 active employees, and Yum! Brands Inc. offered some former employees a lump-sum buyout to offload some of its pension liabilities. General Electric Co. has a major problem. The company ended its defined benefit plan for new hires in 2012, but its primary plan, covering about 467,000 people, is one of the largest in the U.S. And at $31 billion, GE’s pension shortfall is the biggest in the S&P 500.
So, it isn’t just State and Local government pension plans that are woefully underfunded. Corporate America.
What happens when the global central banks stop their monetary nonsense?
Just like the dinosaurs, pension fund recipients face a bleak future.