Wednesday, July 12, 2006
What's in a Promise?
In a current National Law Journal article, Pamela A. MacLean provides a fascinating overview of unanswered questions regarding employee benefit-related promises. She points out that federal courts are being "pulled into the wrangling over how promises of lifetime benefits can be broken, or whether they existed at all", adding that "the courts have not been uniform in their answers". According to MacLean, there are three particular areas of contention that include:
1. Method and timing of benefit recission
2. Bankruptcy impact on the provision of post-retirement medical benefits
3. Health care benefits for individuals over 65 versus younger retirees
With the contemporaneous effort underway to reform pension accounting, any legal decisions that permit companies to expunge their retirement obligations without penalty may accelerate what many experts believe is the ultimate nail in the coffin for traditional offerings.
For additional reading, see "CPAs Debate FASB's Pension Draft", AccountingWeb.com and "FASB Pension Rule Could Spur Loan Woes" by David M. Katz, CFO.com. posted by Susan Mangiero at 7/12/2006 05:34:00 AM
PENSION RISK MATTERSSM focuses on pension financial risk issues from a governance and fiduciary perspective. The goal is to identify important topics, ask thought-provoking questions, examine best practices and encourage meaningful debate about the $10 trillion global pension industry upon which millions of individuals depend. Author and consultant Susan M. Mangiero, Ph.D. is a CFA charter-holder, Accredited Valuation Analyst, Accredited Investment Fiduciary Analyst and certified Financial Risk Manager. Dr. Mangiero combines many years of experience in finance with a keen interest in solving problems and simplifying the complex (
