GERMANY - Siemens AG, Europe's largest engineering company, might have to make a cash injection into its €2.5bn underfunded pension scheme if stock markets fall further, analysts said.

In its earnings release for the fourth quarter today, Siemens said the underfunding of its principal pension plans, with more than €20bn in assets, had risen to around €2.5bn - compared to a €1bn shortfall at the end of the fiscal year 2007.

Frank Rorthauge, director of research at Bank Sal. Oppenheim in Frankfurt, told IPE the rise in underfunding was expected, though added it is likely the company will be required to inject money into the fund if the funding deficit increases further and "gets too large".

He added that he did not expect Siemens to do much for the moment however, adding that the only consequence for now would be the rise of the pension liabilities on Siemens' balance sheet.

Siemens said in its earnings release: "The increase in underfunding was due largely to the return on plan assets, which was pulled down sharply at the end of the fourth quarter by turmoil in global equity markets."

The company was not available for further comment before deadline.



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