Ford Motor Company said on Friday its US pension fund was underfunded by $US7.3 billion at the end of 2002 and that its pension costs would increase to $270 million in 2003, Reuters reported.
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According to Reuters, in slides released in advance of an analyst meeting, Ford said its worldwide pension under-funding totalled $14.5 billion. Its US pension funds had a negative return of 9.7% in 2002 as US stock markets suffered their third straight year of decline.
According to Reuters, Ford said it was changing the assumptions for future returns on its US, Canadian and British plans to 8.75% from 9.5%. The $270 million pre-tax expense for 2003 would be $460 million higher than 2002 when Ford was still realising carry-over gains from the plan from previous years.
Reuters reported that the car maker also said it contributed $500 million to its plans earlier this week and would contribute another $500 million in the first half of 2003 instead of 2004 as planned earlier. It also said it was still on track to produce a $9 billion improvement in profits by mid-decade, the target set in its turnaround plan launched last year after a $5.45 billion loss in 2001.
Reuters noted that General Motors, which operates the largest private US pension fund, said on Thursday that its pension costs would triple to $3 billion this year as stock market declines increased its pension under-funding to $19.3 billion in 2002.
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