Update On Lucent Management Retirees Pension Plan

Reporting data as of the end of 2007, Alcatel-Lucent filed its Form 20F (similar to a 10K in the U.S.) and included information about the funding status of the Lucent Management Pension Plan. At that time the company reported Plan Assets of $18.994 billion and Plan Liabilities (accumulated plan benefits) of $16.412 billion with plan assets exceeding liabilities by $2.582 billion. As you may remember following the stock market downturn in 2002 and Lucent’s use of pension assets to pay early retirement pensions, the management plan assets were less than its obligations until recently.  These amounts at the end of 2007 suggest that the plan is now in somewhat better condition than several years ago.

Because the equity markets have been undergoing some down periods this year, we can probably assume some narrowing of the above positive asset balance. Counteracting that, Lucent changed the investment allocation for plan assets from 75% equity and 25% bonds, to a 50-50 balance late in 2007.

Many of us had thought that the Pension Protection Act of 2006 with improved disclosures would be effective this year but it was effective now only for underfunded plans. We can still expect to receive the Summary information as we did in the past in the October-November timeframe and then the improved data with additional information after the end of April 2009.

You have probably heard of several companies that have increased retiree pensions this year as the result of improved funding levels in their plans. The LRO has not had any indication that Lucent is considering some form of pension increase for its retirees.

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