Friday, March 13, 2009


There have been so many other issues out there, that there has been little in depth analysis of the pension liabilities that many companies carry. But in the near future, the financial press is going to look at companies obligations versus the assets available and find a huge negative gap.

I am assuming that most pension plans used around a 7% return on investments in their actuarial calculations for 2008. I also assume that most pension plans actually incurred a loss of 20% - 50% on their portfolios. The huge gap has to be filled somehow. Unfortunately, it will primarily come out of the employees covered by those plans and the taxpayers who will have to make up the difference through PBGC claims and perhaps, another color of a bailout.

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