DaimlerChrysler faces e5.5bn pensions shortfall
US/German group DaimlerChrysler faces underfunded pension obligations to the tune of e5.5bn by the end of 2002 if capital markets remain at current levels.
Speaking at the disclosure of the third-quarter results, CFO Manfred Gentz announced that, due to weak performance of equity markets, returns on pension assets fell by –12% for US plan assets and –17% for German plan assets up to 30 September.
Gentz said that if the situation continues, the group’s pension obligations will be underfunded at the end of the year by around e5.5bn, of which e3.1bn would be in North America. A decision on the contribution to the pension funds will be taken in the coming months.
Explains Gentz: “The remaining underfunded status would result in a credit to pension accruals charged against equity”. This will result in the equity ration declining over 30 September levels, but there will be no impact on the profit and loss account for 2002.
The pension expense could increase in 2003 by e400m to e600m.