U.S. banks and other financial companies' pensions came into 2008 better funded than in other industries, but some took a beating during the market meltdown while others actually gained ground.

According to a Towers Perrin annual study of more than 300 large companies, the median funded status of pensions across all industries at the start of 2008 was 104%, while the median level for financial services firms was 116%. Towers compared global plan assets to accumulated benefit obligations; other analysts often compare assets to projected benefit obligations, which moves the funded levels lower across the board.

"Financial services firms plans were better funded by a fair amount compared to other industries, and their plans were smaller relative to company size" headed into 2008, said Michael Archer, chief actuary at Towers Perrin.

On average, the funded status at all types of industry pensions had declined as low as 75% by start of 2009. A decline in funded status can play a role in determining how much money a company must contribute to the plan in subsequent years, but doesn't always result in required contributions - actuarial calculations involve other factors as well.

Some financial services firms' pensions got clobbered last year such as mortgage lender Fannie Mae (FNM), which saw the funded status of its pension sink to 69% at the end of 2008, compared to 108% in 2007. Although the downturn touched nearly every corporate pension, Fannie Mae's portfolio was particularly stock-heavy, with 84% in equities headed into 2008.

Similarly, troubled insurer American International Group Inc. (AIG) took a hit to its pension plan during 2008; the funded status heading into 2009 dwindled to 69% compared to 96% at the start of 2008. Although its asset allocation was quite moderate - its plans held between 50% and 56% in stocks - it still suffered investment losses, as well as higher retiree obligations.

Fannie Mae doesn't expect to have a required minimum contribution in 2009, according to its annual report; it declined to comment for this article. AIG last month put enough cash into its U.S. plan to bring the funding level above 100%.

Besides Fannie and AIG, other financial services company pensions also experienced downturns, but because they were so well-capitalized headed into the market rout they've emerged nearly fully funded anyway. Such is the case for JPMorgan Chase & Co.'s (JPM) plan, which ended 2008 by losing 35 percentage points - down to a 95% funded level. The company nevertheless made an optional $1.3 billion cash contribution in January to its U.S. pension plan, funding it to the maximum allowable level for tax purposes. Home mortgage lender Freddie Mac (FRE) saw its plan's funded status drop by 46 percentage points, but since it was 142% funded by the end of 2007 the company ended 2008 with a 96% funded status.

Other financial firms experienced smaller declines. Such was the case for Citigroup Inc. (C), which ended 2008 with a 102% funded level compared to 115% at the end of 2007; Prudential Financial Inc. (PRU), which declined to 123% from 132%; and Bank of America Corp. (BAC), which went to 101% compared to 127%.

There were also a select few companies on Wall Street that actually saw their pension plans improve despite poor market conditions in 2008. Goldman Sachs Group Inc.'s (GS) plan rose to 109% at the end of 2008 compared to 101% at the close of 2007, while Morgan Stanley's (MS) went to 124% from 98%.

Neither firm would comment on how their plans improved during the global market meltdown. But both made cash contributions during the year, which helped boost asset levels, and both ended their fiscal years in November, avoiding December's interest rate declines, which swelled obligations more for calendar-year ended plans.

Many pension analysts say that for investors, what's most important is how large a pension is relative to its company's size. From that standpoint, financial services firms also entered 2008 in a better position than other industries. The Towers Perrin's study showed that across all industries, the median projected benefit obligation as a percentage of corporate assets was 14%, while for financial services firms, it was 1%. The annual reports for the companies mentioned above show no significant change in those levels, with most reporting obligations well below 1% of total assets.

-By Lynn Cowan, Dow Jones Newswires; 301-270-0323; lynn.cowan@dowjones.com