Pension plans sponsors are starting to weigh tough choices after suffering devastating returns in 2008, even after accounting for relaxed funding requirements in the Worker, Retiree and Employer Recovery Act of 2008.

A global poll conducted by investment management firm SEI says U.S. pension assets plunged by at least 20 percent in 2008 and nearly all U.S. pension plans suffered losses to some degree. Nearly three-fourths of companies participating in the poll said required contributions before funding relief would have been impossible or would have significantly impacted corporate finances.

A recent report by RickMetrics Group said the relief provided in the Recovery Act in December has already been offset by sharp declines in equity markets and bond yields. Jon Waite, chief actuary at the SEI, said any relief that came with the December act can be seen only as short term. “They have a little more flexibility in the difficult business environment,” he said. “But over the long term, funding will have to be made up by investment results or cash contributions, ultimately.”

The SEI said almost half of U.S. pension plan sponsors say it is now more likely they will take steps to terminate pension plans. “Funding levels deteriorated during calendar year 2008, and that is causing significant concern and reaction among plan sponsors,” he said. “They’re focused on the cash they’ll have to contribute to plans and how those requirements are going to fit into overall corporate planning.”

Increasingly, plan sponsors are looking at changes to the plan itself, Waite said, including changes in asset allocations, investment opportunities, and closing or freezing plans. And they’re not encouraged by market activity in the early part of 2009, he said. “It does not look like there’s bounceback expected in the very near term, but they’re looking at the long term and what they’re going to have to do to make the business viable.”