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Pension Plans' Investments Not Easy To Find Out

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The Associated Press

Published: December 12, 2007

Updated: 12/11/2007 08:44 pm

NEW YORK - If you want to know how much of your pension fund is invested in mortgage-backed securities, you'll have to ask the fund manager.

The disintegration of value in securities linked to mortgages has led to multibillion-dollar write-downs at the world's largest investment banks.

Yet concerned workers may find disclosure rules make it "virtually impossible" to determine whether their pension plan holds mortgage-related investments, and if it does, what those investments are, according to a research report Monday from Credit Suisse.

Total pension fund investments in mortgage-related securities appear to be substantial, according to Credit Suisse, which estimates that government pension plans hold $195 billion in mortgage-related securities. Corporate plans hold an additional $175 billion, according to the report.

But "the typical asset allocation information does not provide much more detail than the amount allocated to equities, fixed income, real estate and other," Credit Suisse accounting analysts David Zion and Amit Varshney wrote. "It's better than nothing, but still lacking for investors trying to figure out the risks that a company is exposed to through its defined-benefit pension plan."

The authors suggest disclosure rules might improve as the Financial Accounting Standards Board revises pension reporting requirements.

Although some companies have been closing traditional, or defined-benefit pension plans, many workers are still counting on them. Of the Standard & Poor's 500 companies, 374 have defined-benefit pension plans, according to Credit Suisse.

At the end of 2006, 115 company pension plans were in bad shape, with less than 80 percent of the funding they need, according to the report. Credit Suisse estimates that will drop in 2007 to 99 companies, or 26 percent of the traditional pension plans in the S&P 500.

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