Pensions - Articles - S&P Capital IQ: Pension Problems in Europe


A new research brief from S&P Capital IQ’s Quantamental Research Team outlines by-the-numbers which companies have the strongest (and weakest) pension funding status, what the global trends are in pension funding and accounting, which companies have the most aggressive (and conservative) accounting assumptions, and which underfunded plans with the least- (and most-) improved three-year funding improvements.

 The following are some of the key findings:
     
  1.   Financial companies appear to have the best funding status in both the U.S. and in Europe, with BBVA being a notable exception
    2.  
  2.   Investment returns have been solid, but cash contributions to pension funds have been declining across regions, relative to plan assets, despite the tremendous amount of cash corporations have on hand--for S&P 500 companies, from 5.9% of assets in 2008 to 3.4% in 2013
    3.  
  3.   In both the U.S. and Japan, industrial companies have high actuarial rates (conservative accounting)—and S&P 500 industrial companies appear to have lower (more aggressive) ratings
    4.  
  4.   Just 38% of S&P 500 pension plans are funded at 90% based on current data
  
 For S&P 500 companies as well as those in Europe and Asia, there’s been a noticeable shift to fixed income investments and away from equities, which could make things difficult with central banking QE plans. A bull market, if it appears, could also prove problematic.
  
 Please download the full report by clicking on the document below
  
 
 
  

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