Corporate Pensions Face Pressure Despite Rally
By MARY WILLIAMS WALSH

This year's stock market rally has added more than $100 billion to corporate America's depleted pension funds, but even that has not been enough to offset forces that continue to weaken the funds.

If all of America's 500 largest companies had to make good on their promises to workers and retirees immediately, they would have to plug a $259 billion gap in their pension funds, according to a study by Standard & Poor's which will be published soon. A year ago, even though stock prices were lower, the same companies were considerably closer to meeting their obligations, being only $212 billion short.

That is because their obligations to their workers have spiraled up at an even faster pace than stocks have risen. One obvious reason for this is that as the baby boom generation ages, many more people are starting to claim their money. Another factor is that many pension calculations incorporate several years' worth of data, to smooth out sharp fluctuations, so the market shocks of the last three years are still working their way through the system. Finally, an otherwise positive economic development, low interest rates, is an albatross on the funds because they magnify the value of future pension obligations in today's dollars.

Whatever the reasons, for the nation's corporate pension funds to have lost ground in this year's bull market suggests that the troubles that flared up in the bear market will not be easily cured, and almost certainly not by market gains alone. But after more than a year's search for solutions, officials with responsibility for the $1.6 trillion sector remain sharply divided on what to do.