Finance Executives Support Stronger Pension Funds

A survey of 122 Chief Financial Officers (CFOs) by Grant Thornton showed that 84 percent support the Financial Accounting Standard Board (FASB) proposal to report the level of pension funding on the balance sheet. The response came as a surprise to many, but “because corporate pension information is already disclosed in the notes to the financial statements,” said John Hepp, a senior financial professional-standards manager at Grant Thornton, according to, finance executives would not object to the new rule. “The results of the survey may also reflect the long-term shift from corporate defined benefit plans to defined contribution programs such as 401(k) and 403(b) plans. The latter will not be affected by the FASB proposal,” Hepp added.


Low Cost Accounting Software Support

Provider of low cost support, consulting, training and custom report writing for MAS 90, MAS 200 and MAS 500 accounting software systems. Call us toll free at 1-866-762-3990 to learn how we can help.

The CFOs surveyed by Grant Thornton came from companies ranging in size from more than $2 billion in annual revenues, to companies with less than $50 million.

S&P 500 companies, carrying large amounts of cash at the end of 2005, “may use excess cash to increase funding levels of pension and, potential retiree health care liabilities”, a Goldman Sachs report issued on Monday says, according to “With final pension reform changes likely to be enacted over the next several weeks, therefore providing plan sponsors with greater clarity as to the rules and regulations for the next several years, some companies may use excess cash to raise funded levels,” the report said. The report also noted that the accounting rule change proposed by the FASB “could provide further incentive for plan sponsors to use excess cash to increase funded levels and avoid notable balance sheet adjustments.”

The Grant Thornton survey found that 84 percent of the CFOs thought Congress should make it tougher for companies to turn over their pension plans to the Pension Benefit Guaranty Corporation (PBGC) which is funded entirely by member premiums, says. Executives from firms that have kept pace with pension contributions object to paying higher premiums to support companies in Chapter 11, with seriously underfunded plans.

House and Senate negotiators are working on a pension reform bill that may make it to the floor in two weeks, Reuters reports. The Senate version of the pension bill includes special relief for struggling airlines, and some congressmen fear that the auto companies are about to unload their obligations on the PBGC. The PBGC is running a $22.8 billion deficit. The Bush administration opposes special relief for certain industries or companies, Reuters says.

In an effort to boost returns, pension fund managers are turning to investments in hedge funds, according to a recent study by State Street Corp., reported in Reuters. The California Public Employees' Retirement System, CalPERS, the biggest pension fund in the U.S., invests approximately $2.5 billion of its $207 billion in hedge funds, and other pension funds are following their lead. Forty-four percent of pension funds reported investing at least 10 percent of their money in hedge funds last year, up from 35 percent the year before.

You may like these other stories...

Credit Suisse says pension assets at risk unless court delays sentencingJohn Letzing of the Wall Street Journal reported on Wednesday that Credit Suisse Group AG says its management of billions of dollars in assets for...
The prospect of International Financial Reporting Standards (IFRS) being fully adopted in the United States in the near future are growing less likely, as the Financial Accounting Standards Board (FASB) and the International...
House proposes $10.5B, eight-month highway billThe House Ways and Means Committee proposed a transportation funding bill on Tuesday that calls for a temporary extension of current transportation funding levels until May 31,...

Upcoming CPE Webinars

Jul 16
Hand off work to others with finesse and success. Kristen Rampe, CPA will share how to ensure delegated work is properly handled from start to finish in this content-rich one hour webinar.
Jul 17
This webcast will cover the preparation of the statement of cash flows and focus on accounting and disclosure policies for other important issues described below.
Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.