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To: Paul Smith who wrote (38357)	2/2/2013 3:51:31 PM
From: i-node	2 Recommendations Read Replies (1) \| Respond to of 85487

>> To me, it seems like this sort of thing can be estimated with more precision than estimating what future profits at AT&T will be. Absolutely correct. There are few projections that can be done as accurately as the cash demands of a pension. The only real challenge is in estimating life expectancy of the affected population. This guy Research doesn't have a clue what he's talking about.

To: Paul Smith who wrote (38357)	2/2/2013 6:37:35 PM
From: research1234	1 Recommendation Read Replies (3) \| Respond to of 85487

Pension liability calcs are best though of as annual successive approximations that help aim funding towards a moving target. Any given snapshot is not very reliable, but over time the series of estimates will point in the right direction. The biggest issue is picking the right interest rate to discount the liabilities. Accounting and funding rules force a discount rate based on high quality bonds, which many would argue doesn't make a lot of sense since pension assets are invested in a broad cross section of vehicles which over time tend generally earn much more than bond returns. You are right about corporate pensions - since there is no guarantee that a corporation will still exist in the future when today's pension promises will become payable, pension funding rules are designed to build up pension assets in segregated funds in a systematic fashion to try to ensure that the money will be there when its needed. Governments are of course quite different - since they have full taxing abilities, government pension funding has always been problematic. I think most if not all states have played games with funding targets at some point, and I'm pretty sure that Reps have been just as guilty as Dems. Thats why I have a high degree of confidence that many state and local pension plans will implode in the next 30 years or so.