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US Pension Funds: Mind The Gap
Nine out of ten US pension plans are underfunded, many because the capital markets have failed to meet the ambitious expectations of fund managers. Some have been hoping that an upswing will bail them out or relying on accounting changes to smooth over the gap. But these approaches delay the moment when companies finally address the root causes of their pension deficits and could undermine the good will of their employees.
The take-away: Rather than waiting for outside forces to lift the fortunes of pension funds, their managers should move quickly to follow the example of companies that have closed the pension gap. These managers should consider increasing contributions to the funds and improving their performance through stepped-up governance and better operating approaches.
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