While employees are licking their wounds over big hits in their 401(k) balances, employers are trying to weather their own perfect storm — collapsing operating profits combined with soaring deficits in their defined contribution plans, largely because the bulk of their pension assets have been invested in equities, which have taken a dive.

As companies infuse their pension plans with cash to meet funding requirements, investors strike back. According to The Wall Street Journal, shares of NCR fell 15 percent on February 5, after the tech-services giant announced that it would contribute $120 million into its pension this year and another $200 million or more next year. Like most plans, NCR’s plan was invested very heavily in equities.

It comes as no surprise, then, that plan sponsors are revisiting their investment management strategies. According to a new survey by SEI’s Global Institutional Group, nearly two-thirds of global poll respondents made asset allocation policy changes in the past year and nearly half said that they’re moving assets out of equities. Three quarters of U.S. survey participants said that their organization has already moved assets out of equities and into bonds or alternatives.

Funding levels for companies surveyed have been hit hard. Almost two-thirds of the group saw a decrease in funded levels of at least 11 percent last year, a third said that their funded level decreased by at least 21 percent and 10 percent said that the decrease was over 31 percent.

The only ray of sunshine for plan sponsors is that stringent new funding requirements have been back-burnered, at least for a while. Almost half of all survey participants said that if their organization was required to make cash contributions to meet funding requirements, it would have a significant impact on overall corporate business.

If the market gets well this year, companies with big pension deficits could get a much needed boost, but nobody seems to be holding their breath and hoping for the best. Past instances of big deficits in pension funding were substantially less and required multiple years of robust markets to correct. “Increased underfunding will have a substantial impact on organizational finance, and from our perspective, continuing ‘as is’ is not a choice,” says Jon Waite, chief actuary for SEI’s Institutional Group. “Changes will need to be more strategic and less reactive.” ###