Michael Moran talks about how companies got into this mess—and how they might get out of it
By VIPAL MONGAThe growing weight of pension obligations is forcing more corporations to take dramatic steps to lighten the load.
WSJ: What are some strategies companies are using to shrink these pension deficits?
MR. MORAN: We've seen a number of strategies undertaken by plan sponsors. Some have shifted asset allocation to more of a dynamic framework, where asset allocation changes as funded status changes. Simplistically, this involves increasing allocations to fixed income as funded levels rise as a way to lock in that funded status.
More recently, we have seen plans instituting lump-sum options to their participants as a way to shrink their gross pension obligations. We've also seen some plans enter into annuity contracts with some insurance providers as another way of moving the liability off their books.
Finally, we've also seen a number of plan sponsors making voluntary contributions, taking advantage of the record amount of cash that's on corporate balance sheets, as a way to help improve funded levels.