Overfunding Pension Plans?

While most of our industry has moved away from  defined benefit retirement plans, actions by DuPont are worth noting for those still making that type of contribution.

CFO Nicholas Fanandakis said his company will contribute to its pension only as much as current law demands, to avoid overfunding the plans if interest rates rise.

“I look at making those contributions to pension plans as required,” Fanandakis recently said in an interview.

DuPont ended 2012 with a gap of $6.6 billion in its U.S. pension plans. The industrial conglomerate contributed $500 million to that plan last year, but doesn’t expect to make any contributions this year. Fanandakis said he likes to keep the plans funded at 80% for regulatory purposes, to avoid having its ability to make payouts restricted, under rules set by the Pension Protection Act of 2006.