>>Therefore, would not these liabilities actually fall in values at recipients die and/or move into the 401K programs? <<
If an employee is not covered in a pension plan, there is no liability for his pension either. I know that some companies have switched to defined benefit plans like 401k, but if an employee started working for them at let's say age 40, he can accumulate another 20years of benefits until retirement (if he does so at 60 years)and then draw his pension for another 25 years, depending on his lifespan, so in this case, there would be a 45 year long obligation locked in for this employee, potentially.
These obligations have a long tail, just look at the tail of asbestos insurance. Asbestos was not used as a material since the early 70's, so one would assume that the number of cases starts to wind down, due to mortality, yet the liabilities keep going up with new cases popping up... At some point, the liabilities max out, but it's going to take a long time for these pensions. |
