Pension Rules Get New Look Philadelphia Inquirer (05/29/03) p.C7; Babington, Deepa
The Financial Accounting Standards Board is considering boosting pension liabilities for corporate America by changing the way pension obligations are valued. Companies affected by the change are those offering cash-balance pension plans, including about 20 percent of Fortune 500 companies. Rather than valuing pension plans based on high-quality, long-term corporate bonds, companies would be required to value pension plans based on an interest rate tied to a market index. Implementation of the plan would mean corporate pension liability could increase by as much as 40 percent, according to the ERISA Industry Committee. Mercer Human Resource Consulting retirements chief actuary Ethan Kra says that the proposal will force some companies to take a charge against shareholder equity. Kra warns that companies may say, "'Enough is enough, goodbye, we're out of the system.'"