Wayne,
>>>>I assume that in a normal environment for stocks and bonds, (as far as returns go) that GE funds its pensions annually as well as getting a return on the existing assets>>>
GE has not funded its plan since 1987: pension fund assets are so large that the IRS won't allow them to contribute any more. I would guess that current plan assets exceed the present value of ALL future benefits payable to all plan participants (retired, active, whatever).
Assuming the plan was not so overfunded, a rough estimate of the ongoing pension expense would equal the plan's "Service Cost for Benefits Earned", as defined by FAS87 and shown in the Company's pension footnote. Service Cost was $625 million in 98; $596 million in 97. So, you might argue an expense of $625 million has been turned into income of $1,016 million, a swing of $1.6 billion. This situation is not temporary, unless the assets incur absolutely horrendous losses. Going forward, the plan will annually incur pension income of $1 billion or more forever, assuming asset returns of 8% to 9.5%.
|
