image Pension funds of companies in the Standard & Poor’s 500 stock index could be underfunded by a record amount amid what is shaping up to be the worst year for stocks since 1931, said S&P.

It added the woes could result in firms being forced to slash their contributions to pension funds, or terminate their plans altogether, if economic conditions don’t improve in 2009.

Equities losses this year are expected to help result in pension funds being underfunded by $257 billion, or 18%, easily topping the record $219 billion shortage in 2002. They ended 2007 with overfunding of $63.4 billion, or 4.4%, the first surplus year since 2001.

Wall Street Journal