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Pension plans lost $445 billion in 2008 - study

NEW YORK, Feb 12 (Reuters) - The funding levels of U.S. corporate pension plans tumbled $445 billion in 2008, reaching historically low levels as drops in the debt and stock markets hurt asset values, according to a study on Thursday.

The sharp losses wiped out the $78 billion over-funded surplus from 2007 and left companies with a combined $366 billion pension funding deficit, the study of pension data by consulting firm Watson Wyatt Worldwide Inc WW.N showed.

The study looked at pension plans at 450 Fortune 1000 companies, representing some of the largest U.S. companies.

The funding drop was largely caused by a 24 percent fall in the value of pension plan assets, according to the study. Adding to the problem, pension plan liabilities also rose due to an increase in bond rates, Watson Wyatt said.

The firm said it expects that 61 percent of pension plans will have funding levels of only 50 percent to 70 percent for 2008. By contrast, at the end of 2007, 46 percent of pension plans were between 90 percent and 110 percent funded and only 5 percent had funding levels in the 50 percent to 70 percent range.

“Changes in funded status are wreaking havoc with the projections companies have made,” Alan Glickstein, senior retirement consultant at Watson Wyatt, said in a statement.

“Large and unexpected pension contributions will require companies to divert funds they had earmarked for other business activities into their pension plans precisely when they can least afford it.” (Reporting by Emily Chasan, editing by Maureen Bavdek)