How does your retirement program stack up? - 2009 is the latest installment in Mercer's annual survey and analysis of the retirement programs sponsored by companies in the Standard & Poor’s 500. The survey provides total and industry-group benchmark data and encompasses the three policy levers of Mercer's integrated Retirement Financial Management (iRFM) framework: design, contributions and investment. You can use this information better understand how the performance of your own retirement plans compare to your company’s business and financial objectives.
 
The data used in the report was gleaned from 10-K filings for fiscal years ending in 2008 and covers all types of retirement programs – traditional defined benefit (DB) pension, 401(k) and other defined contribution plans and post-retirement medical and life insurance arrangements.

Below are some of our key findings this year:

• For the first time in 2008, median spending on defined contribution plans like 401(k)s exceeded the median spending for pension benefits earned in defined benefit plans
  
  
• Weak asset returns reduced the 2008 median funded status of DB pension plans to 72%, down from 94% in 2007 and below the previous low of 75% in 2002
  
  
  • 13% of companies fall into the most serious category of large, poorly funded plans – less than 75% funded and pension obligations that total more than 40% of market capitalization
    
    
• The average target asset allocation for DB pension assets was 58% equities, a five percentage point decrease over the past four years

We thank you for your interest in our benchmarking report and we encourage you to contact your local Mercer consultant for additional information or for customized analysis.

About the survey

We track and measure important retirement benchmarks to help employers evaluate their retirement programs against those of companies in the S&P 500 or those of various industry groupings within the S&P 500. As we review these benchmarks and statistics, we focus on four kinds of measures – pension health, materiality, volatility and sustainability – and incorporate the three policy levers of Mercer’s Integrated Retirement Financial Management (iRFM) framework that can affect these measures – design, contributions and investment. These policy levers, which should be managed and governed as a coordinated strategy, allow a business to link its retirement financial objectives and constraints to its business financial outcomes.

The survey summarizes and analyzes information gathered from 10-K filings for S&P 500 companies for fiscal years ending through January 2009. Of the 500 companies included in our survey:

• 376 sponsor a defined benefit (DB) pension plan with:
  
  
  • $1.45 trillion reported pension obligations as of fiscal year end
    
    
  • $1.14 trillion reported pension assets as of fiscal year end
    
    
• Six companies have a post-retirement medical (PRM) plan but no DB pension plan
  
  
• 108 companies sponsor only a defined contribution (DC) plan and 360 others sponsor a DC plan in conjunction with either a DB or PRM plan

Throughout the report, we use “FYE2008” to refer to the end of the fiscal year that ends between February 2008 and January 2009 (for balance sheet data); we use “FY2008” to refer to the same fiscal year for income,expense and cash flow data. We use January as a cutoff date to capture the most recent information for retail companies, many of whose fiscal years end in January. Similar conventions apply for earlier years.  Market capitalization, wherever used, is as of the end of January (the latest fiscal year end for companies included in the survey).

Also, as part of the continuing process of data review and update, some results from prior years have been revised and differ from amounts published in previous versions of this report. These changes were neither significant nor material and had no effect on the principal conclusions or analyses.