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To: Perspective who wrote (201070)	10/30/2002 10:52:40 AM
From: reaper	Respond to of 436258

bc assets are assets. not subject to any interpretation (assuming none of the assets are invested in Beacon Hill <g>). liabilities are estimated. what you are trying to get to is the 'net present value' of your future pension liability. that future pension liability is based on a number of assumptions, including but not limited to: life expectancy of existing and future retirees future wage increases to be experienced by current workers (since their pension amount is generally based on some equation involving the last few years of salary) rates of inflation (especially if pensions are indexed) discount rate (to discount these future cash flows back to present levels) all of these numbers are subject to some level of guesswork and interpretation, although presumably any moron could grab an actuarial table for life expectancy. the number most subject to interpretation is the discount rate. in many cases the current discount rate is IMO too high; a lower discount rate of course INCREASES the net present value of future cash outflows, thus INCREASING the liability. that said, we will need interest rates to stay low for a while before people start changing the discount rate assumption. also, the media will not get on the case of companies about bad discount rate assumptions 'cause its too hard for those moron 'financial' reporters to understand. Cheers