I am writing this on Monday morning. I skidded to work and turned on my computer, to discover that the Dow has fallen below 7,000. The worst may be yet to come, because of underfunded pension plans.

Many large companies maintain pension or profit-sharing plans. Pension plans may be either "defined benefit" or "money purchase" plans. In a defined benefit pension plan the employee is guaranteed a specific benefit at retirement, such as a percentage of the highest three years of compensation. A money purchase pension plan requires the employer to contribute a particular percentage of pay each year, and the benefit at retirement is whatever the fund of money will purchase.

In a defined benefit plan, if the accumulated funds are not sufficient, the employer must make up the difference. With the falling market, most defined benefit pension plans will be underfunded.

If pension plans fail, the Pension Benefit Guarantee Corporation, an independent government agency that acts as insurer of many defined benefit plans, may fail as well, because it is now about 15 billion dollars underfunded. The government may seek to bail out the PBGC as well.

If your portfolio has been reduced in value, take a look at your estate plan. If you provided for monetary gifts to some beneficiaries, with the balance of your estate to others, take a look to see if, with the reduction in value of your estate, this is still what you want to do.

For instance, you might have provided for a dollar amount to certain beneficiaries, with the rest of the estate going to the persons you really cared about. With the reduced value of your estate, there might be enough to make the specified gifts, but little or nothing to your primary beneficiaries.

This problem might be cured by changing the benefit formula so that the specific gifts would be reduced, or even eliminated, as the value of the total estate became less. This would protect the beneficiaries you cared most about, but would also provide for the other beneficiaries when the market recovered.

If you have questions about whether your estate plan will accomplish your objectives under present market conditions, we will be glad to help you.