NYT,pg1: Talk of Changing Pension Math Raises Concern on Benefit Cuts

[DeepModem Mom]

Talk of Changing Pension Math Raises Concern on Benefit Cuts
By MARY WILLIAMS WALSH

Published: January 20, 2005


AT&T, the once-mighty phone giant, has a pension plan with obligations of about $10 billion, according to its annual report for 2003. Yet the company paints a somewhat rosier picture for employees: an extrapolation from workers' individual statements indicates that the plan owes them roughly $10.6 billion, or 6 percent more....Like many other companies, it uses two methods to calculate the value of its pensions: one to tell employees how much they have earned, the other to tell investors how large the company's pension liability is.

But that may soon change. The seeming discrepancy in accounting, which has been an accepted business practice for two decades, has begun to bother accounting rule makers, who say the practice allows companies to understate to investors the extent of their pension liabilities.

The panel that sets accounting standards is now preparing a proposal that would require many big American companies to give a more accurate financial picture of their pension plans. As a result, a number of them will have to increase the pension liabilities on their books, in essence telling investors that they owe their employees more than they have disclosed in the past....

***

While the amounts paid to retiring workers would not change immediately, some companies would have to increase their reported pension liabilities as much as 30 percent. To bring things back into balance, some may contribute more money to their pension funds - a boon to participants, but a jolt to shareholders, who may have thought that the money would be used for business operations. Other companies may delete attractive features from their plans, to bring the cost back down....Many companies, citing the burden of providing retirement benefits, have cut back, converted or closed their plans. At the same time, the Bush administration is proposing changes in both the way companies set aside money to pay for future benefits, and the way they pay to support the federal system of insuring traditional pensions. Business groups have warned that if companies are pushed too hard, they may stop offering pensions altogether....


http://www.nytimes.com/2005/01/20/business/20pension.html?oref=login&pagewanted=all&position=

[UL_Approved]

1. Two things:

1. Your link goes through a VERY annoying ad.

2. This is great to see some accountability. Its also not surprising to see that some companies have drastically inflated pension benefit figures for employees. Its also not to surprising that Bush is trying something entirely different for a law. The world will see how this goes.

As a side observation: I've noticed that as Bush and cronies have done more crime and taken away more freedom that more and more people are working for quiet and long-needed reform behind the scenes. I guess that when the leader of your country offers you nothing, you rebel by fixing old practices that you could tolerate before. If you think about it, Bush is either pulling lame bullshit from the perspective of a tyrant, or he is pulling reverse psychology on us to make us change and improve. :tinfoilhat: :silly: But one thing I know, from watching all the reform creep its way into our society, Bush is so bad that he gets good accomplished, in a roundabout way...

[DeepModem Mom]

2. Sorry about the ad --

Hubby has installed some fierce stuff on the computer that skips ads (although I saw that there was an ad that would have appeared).

:)