Post-plunge pension plans are largely unchanged

Article Abstract:

A survey of personnel executives at 23 companies with 1.4 million total employees reveals that the Oct 19, 1987 stock market crash had little long-term effect on the investment strategies or values of their corporate pension plans. Over one-third of the firms regained all of their losses, but one-fourth regained less than half of their losses. The maximum losses were in the 20-to-30 percent range of the total pension plan's value. Most firms employ a long range and relatively conservative investment strategy, with 13 of the firms suffering losses of over $700,000. Personnel executives at 19 of the firms report no effect of the stock crash on personnel policies or programs.

Management, Planning, Surveys, Pension funds, Human resource directors

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Did your pension plan crash with the market?

Article Abstract:

The stock market crash of Oct 1987 affected pension plans, stock option plans, and the question of benefits taxation. Both defined contribution and defined benefit pension plans suffered, especially for those retiring soon. The gains of stock option plans were wiped out, but probably not the inherent value of the stocks themselves. Employers are considering a combined plan that may mitigate future market drops. Some employers are considering cash bonuses instead of stock options for the future. Since tax increases have been discussed in Washington, the familiar question of taxation of employee benefit programs may arise.

Taxation, Compensation and benefits, Pensions, Employee benefits, Employee stock options, Stock Market Crash, 1987

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