Pension Funds -- the Next Shoe to Drop

As personal-savings accounts are starting to resemble piggy banks more so than treasure chests, pension income for workers lucky enough to have a defined benefit plan will become even dearer.

The problem is that every major pension fund, public and private, has been investing in the same risky assets that have crushed personal accounts and they, too, are now suffering losses that could lead to funding crises and, perhaps, government intervention.

Goldman Sachs' Global Markets Institute estimates that corporate defined benefit pension plans have fallen from being 108% funded at the end of 2007 to being 91% funded as of Oct. 13. This drop has led to a cumulative funding deficit of $115 billion. This means corporate defined benefit pension funds have lost $217 billion in 2008. ...