Study: U.S. companies face $109 billion pension tab in '09

NEW YORK (Reuters) - U.S. companies may be forced to contribute almost $109 billion to their corporate pension plans this year to fill funding gaps caused by turmoil in the financial markets, a new study showed on Tuesday.

Companies are failing to meet the minimum funding thresholds on their pension plans, which will force them to devote more capital to shore up their obligations, according to consulting firm Watson Wyatt WW.N, which conducted the study.

The U.S. Senate unanimously approved legislation last month to help pension plans, but according to the Watson Wyatt study, that legislation will only lower the funding requirement by about $16 billion.

Watson Wyatt expects companies also would have to contribute more than $102 billion in 2010. Both of these figures are up sharply from the $38 billion that companies were required to contribute to the plans last year.

“While the (legislation) will provide some relief, given the magnitude of declines in pension assets and funded status, companies will still struggle to meet the large and unexpected contributions required in the next two years,” Watson Wyatt said in a statement.

Watson Wyatt said proposals now before Congress for further legislative relief could sharply reduce the funding requirements, by giving companies more choices about ways they can “smooth” the value of pension plan assets over several years rather than marking the value of pension plans to the current market level.

The Pension Protection Act of 2006 requires companies with underfunded plans to pay additional premiums and closed some loopholes that allowed companies to skip payments. But companies have told Congress they may not have the cash to meet all of those funding requirements this year.

Corporate defined-benefit pension plans cover about 44 million Americans, according to the Pension Benefit Guaranty Corp.

“As contributions jump, employers may be forced to make tough choices to cut costs,” said Mark Warshawsky, director of retirement research at Watson Wyatt, in a statement. “We hope that with more temporary funding assistance, employers will still be able to provide defined benefits plans and their employees will continue to enjoy retirement security.”

Editing by Brian Moss