The assets of the 100 biggest US company pension plans fell by an estimated $120bn in October - the biggest monthly loss for at least eight years and a sign that pension losses are likely to sharply push down company earnings in 2009.
John Erhardt, a consulting actuary at Milliman, which produced the estimate of the losses, said: "These are volatile times for pensions, and they will likely result in a $40bn reduction in corporate earnings in 2009."
The 100 biggest plans account for about 70 per cent of defined benefit pension assets at corporations.
The big fall in their value has resulted in strong lobbying by industry groups to ask Congress to waive parts of the Pension Protection Act, which would require companies to make big cash payments to their funds this and next year.
Recent rule changes mean that companies must take pension losses on to their balance sheets. The drop in funded status for defined benefit funds would result in a $154bn charge to shareholders' equity at the end of the 2008 fiscal year, Milliman said.
Companies are responsible for closing any gap between assets and liabilities, which will reduce corporate earnings next year, based on US accounting rules.
Separately, the PPA requires companies to make big cash payments to the funds to close any funding gap. In 2008, the cash needed to close the gap will be an estimated $32bn, which will rise to about $93bn in 2009, said Mr Erhardt.
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