Gordon Gekko and Over Funded Pensions
Talk about a blast from the past. As I prepared dinner this weekend, I caught bits and pieces of Wall Street. According to this film that won Michael Douglas an Oscar for his portrayal of Gordon Gekko, "Greed is Good," bad companies deserve to be destroyed and employees are collateral damage. What particularly caught my attention was the reference to an overfunded pension that., post corporate break up, would net this arbitrageur over $60 million in cash.
Wow - have things changed.
In "5 years of corporate funding gains gone" (June 1, 2009), Pensions & Investments reporter Rob Kozlowski reports that the "top 100 U.S. corporate pension plans saw their funded status drop by nearly 30 percentage points in 2008." In dollar terms, the plans reported a deficit of nearly $200 billion compared to a surplus in excess of $111 billion in 2007.
The fallout is no doubt painful for plan sponsors and participants alike. What will be interesting to watch is the plethora of new products being developed to help address funding gaps and better manage plan risk.
Editor's Note: A sequel to Wall Street is under way. I'll buy the popcorn for that movie! Sounds intriguing. Click to read more.
