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To: ild who wrote (17509)	2/18/2004 8:02:28 PM
From: Tommaso	Respond to of 306849

If a lot of government entities go bust, defined benefit pensions could be suspended. I would not want to be getting a defined benefit pension from the State of California. I do not know what legal recourse pensioners have. It is supposed to be a legal contract.

To: ild who wrote (17509)	2/20/2004 7:53:18 AM
From: Wyätt Gwyön	Respond to of 306849

Do you expect that majority of recipients of Defined Benefit Pensions will actually be able to collect on them i think it's impossible to know in advance the percentage of funds that will successfully cover all their obligations, but i consider these funds at least as secure as the equities of the companies with the pension obligations. the issue under consideration here was what the "net worth" of people in a given age bracket is. my contention is that figures excluding DBPs are understating net worth. for example, take GM (please). if you own $100K of GM stock, that will count as $100K toward your net worth. but a pensioner who is guaranteed to receive, say, $40K per year from GM along with family healthcare benefits for the rest of his life is not assigned a net worth for the value of what he receives. that's silly. GM's pension obligations are senior to its equity on the capital structure totem pole. so GM's equity can go to zero and the pensioner may still collect in full, although obviously there's a point where a pension plan can be bankrupted as well. so it's absurd to count shares as part as net worth when a capitalized senior asset is counted as zero. the issue, i think, is how to capitalize the expected cash flows and in-kind benefits, which will vary depending on the funding organization.