Upfront: The Pension Crisis Drags On

Pension plan asset performance may have improved over the last 12 months, but the retirement-funding crisis is far from over. In a November 2003 Deloitte Consulting LLP survey of executives at 125 large companies, nearly 60 percent of respondents said their pension plan was a more significant business issue than it had been one year earlier. Only 4 percent described it as less significant.

Fifty-two percent of respondents were considering changing their pension plans or had altered them in the previous year -- up from 43 percent in a 2002 Deloitte survey. Two-thirds of respondents who have changed their plans cited cost savings as a primary driver of change; cost volatility was a deciding factor for 63 percent. The most common change respondents have made is a freeze on defined-benefit pension plans and a move to defined-contribution plans.

"The pain is increasing rather than diminishing when it comes to defined-benefit plans," says Brian Augustian, Chicago-based principal with Deloitte Consulting. "One year of strong investment returns has not bailed out companies from their huge unfunded pension liabilities." Adds Michael Fucci, U.S. managing director of Deloitte Consulting's human capital practice, "The risks for defined-benefit plans continue to grow, pushing more and more companies to defined-contribution plans. As a result, the burden is increasingly shifting to individuals to manage their retirement income."