Ford's Pension Underfunding Hit $7.3 Billion In 2002.

Ford Motor said that its U.S. pension fund was underfunded by $7.3 billion at the end of 2002 and that its pension costs would increase to $270 million in 2003. Ford said its worldwide pension under-funding totaled $14.5 billion. Its U.S. pension funds had a negative return of 9.7 percent in 2002 as U.S. stock markets suffered their third straight year of decline.

Ford said it was changing the assumptions for future returns on its U.S., Canadian and British plans to 8.75 percent from 9.5 percent. The $270 million pre-tax expense for 2003 would be $460 million higher than 2002 when Ford was still realizing carry-over gains from the plan from previous years.

The company said it contributed $500 million to its plans in January 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.