The bad news: U.S. equities returned negative 1.9% in October after seven months of positive performance. The good news: An increase in AA bond yields kept the funded status of pension plans sponsored by S&P 1500 companies largely unchanged last month, according to Mercer estimates.

The consulting firm found that the funded status of pension plans sponsored by S&P 1500 companies remained flat at 80% (deficit of $307 billion) in October. Comparatively, the 2008 year-end deficit was $409 billion, corresponding to a funded status of 75%.

Based on the October figures, Mercer anticipates a 2010 pension expense for the S&P 1500 companies of around $40 billion, nearly double the 2008 reported pension expense of $21.7 billion, according to Adrian Hartshorn, a member of Mercer’s Financial Strategy Group.

In accordance, companies should plan for higher cash contributions, the requirements of which are determined under the Pension Protection Act, adds Hartshorn. “Despite the somewhat greater flexibility over the timing of contributions granted by legislative and regulatory relief, fundamentally pension plans are still underfunded and there will be a phasing in of increased contribution requirements to fund the deficits,” he says. “This also comes at a time when we expect that plans will have little or no credit balances available to help pay these contributions.”