CitationLover
Aw, Nuts!
- Joined
- Feb 26, 2003
- Posts
- 3,316
Typical reaction to a shoved down government regulation. Now imagine what the "stimulus" will do.
The problem in "funding" pensions is the apples to oranges problem. You fund with a single payment (spread out over "quarterly" contributions) and pay out with an annuity. Actuarial assumptions, are simply that: assumptions.
With interest rates continuing to drop, liabilities are only going to keep increasing (as interest rates go down, liabilities go up), even on a frozen plan like CAL's. Couple that with recent collapse of REIT's and Equities (which affects the other side of the equation: the assets) and you have a perfect storm. Its due to this relationship why pension funds swing wildly from "over"funded to "under"funded status. No amount of smoothing, etc can get you away from this. This is also why defined benefit plans are dying and slowly disappearing from benefit plans and switching to a much easier to fund defined contribution plans (401k, B funds, money purchase, profit sharing, etc.). When the equities market returns to a bullish state you will have articles stating the exact opposite: Pension funds being the single largest assets in corporate books (this happened in the late 90's and a few years ago).