In The News
| November 6, 2009
Am I My Brother/Sister Corporation’s Keeper: The Right To Contribution for Pension Plan Underfunding
The current economic situation has created the perfect storm in terms of the funding of defined benefit (DB) pension plans. This is particularly true for DB pension plans attempting to terminate and purchase annuities to fund all accrued benefits. The value of the assets in plans has fallen precipitously; many have declined 30-40 percent. The 100 largest U.S. pensions declined by 26 percent in 2008 and were about 79 percent funded versus being overfunded in 2007. While the markets appear to have improved since the end of 2008, many US pension plans remain largely underfunded. Furthermore, with interest rates at low levels, the cost to purchase annuities to fund benefits has risen dramatically. The same is true with individuals in 401(k) plans who have seen their account balances decrease by 40 percent or more.
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This memorandum is intended only as a general discussion of these issues. It is not considered to be legal advice. We would be pleased to provide additional details or advice about specific situations. For additional information on this important topic, please feel free to call upon your Dewey & LeBoeuf relationship partner. No part of this publication may be reproduced, in whole or in part, in any form, without our prior written consent.
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