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To: E_K_S who wrote (50773)	2/4/2013 9:50:00 AM
From: Spekulatius	Read Replies (1) \| Respond to of 78456

>>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.

To: E_K_S who wrote (50773)	2/4/2013 11:53:52 AM
From: John Koligman	2 Recommendations Read Replies (1) \| Respond to of 78456

Just as a point of information on these defined benefit plans, I can tell you that IBM had them but switched in the early 1980's to a 401k offering. My wife started as a chip engineer with IBM in 1979 and I started in 1980 as a software engineer, and it only took five years of employment back then to be vested. The plan we have also includes a 'survivor benefit' where if one recipient dies, the other continues to receive around 75% of the decedent's pension benefit for life, in addition to his/her benefit. They also allowed you to start collecting at age 55... It wasn't a big deal for us back then, but when I look at the benefits we are owed now, and how much we would have to have in the bank to match them as an annuity for life, it's a eye opener.... Best regards, John PS - I took a look at that article Clownbuck posted and noticed that IBM had the highest absolute pension obligation among the firms listed, at 83 billion dollars...