Depending on who Mega is, this might not be a big deal. In the old days before all the disclosure reqs., in a past recession, Mega might have had the same pension funding situation. Because these are actuarial calculations about how things will work out over the entire future of all participants, and because Mega was assumed to be a going concern and able to make pension payments through the recession, the level of funding wasn't a problem. As Mega came out of the recession and the stock market came back, the level of funding would return to an acceptable level. No one knew about the temp under funding, and it didn't matter.
In today's world, with huge societal changes in markets, and the merger mania of past years in which hedge funds took over companies and cleaned them out, regulations changed and we now are told about the change in the level of funding in pensions.
So, if you work for Mega, and Mega is a company like GE, Boeing, Microsoft or the like, there is really nothing to worry about. However, if Mega is someone with less stellar finances, or prospects than you might have cause for concern. Your DW's time horizon until retirement is also a factor. If she doesn't plan to retire in the next few years, the inability to get a lump sum doesn't affect her.
The company I worked for before retirement used to have a benefit in which they guaranteed that their profit sharing retirement plan would have enough in it so that with SS you would collect the equivilent of a pension. This promise was unfunded, and since the retiremnt plan always did so well, no one ever collected a dime from the guarantee it didn't matter. Then, GAAP acct rules changed, and this "promise" had to be put on the balance sheet. As a result, the company dropped the "benefit" that they never paid anything under and no one was counting on anyway.
Old style pension plans are like lifetime guarantees on products. They are only as good as the future finances of the company allow them to be.
Self-reliance is the key if you work for one of these companies that still has a defined benefit pension plan. Spend less than you make, invest the difference, and expect the world to be a turbulent place.
