Market Volatility Spells Trouble For Corporate Pensions Whose Fiscal Years End Aug. 31


August 31 marks the last day of the fiscal year for many corporations and their pension funds – and recent market volatility has them sweating.

More from the Wall Street Journal:

If the market doesn’t recover by the end of the month, then companies whose fiscal years end in August, such as agricultural firm Monsanto Co. and auto-parts retailer AutoZone Inc., could finish the year with a worse-than-expected rate of return on assets.

“There’s been some high volatility, and for companies that have fiscal years that end in August, it’s going to hurt their funded status,” said Zorast Wadia, a principal at actuarial consulting firm Milliman Inc.

“All that really matters is the last day of the year for accounting purposes,” said Alan Glickstein , a senior retirement consultant at Towers Watson, noting companies only have to explain their pension obligations to investors in their year-end annual reports. “If you are at the end of August, you’d be sweating it out,” he said.

Companies facing this predicament might choose to contribute more at the current fiscal year end, or opt make larger-than-expected cash contributions to their pension plans to shore up their funding status.

Major U.S. indices were up around 1.5 – 1.75 percent as of Thursday morning.


Photo by Sarath Kuchi via Flickr CC License

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