Tackling the Pension Funding Crisis

Shepler, Bob
March 2003
Financial Executive;Mar/Apr2003, Vol. 19 Issue 2, p74
Academic Journal
The article discusses a funding crisis for defined benefit pension plans in the U.S. Interest rates required by law to calculate the present value of pension obligations are too low, thus placing a cash-flow burden on firms by compelling them to overfund their plans. The author proposes several corrective measures. He believes an average rate for high-quality corporate bonds should be employed to determine present values, and that mortality tables used by pension plans should be updated.


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