Pension Plan Poker

Identifying the true cost of pension plans on a corporate income statement is an extremely frustrating financial analysis exercise. Pension obligations are actuarily rebalanced every three years depending on how the fund did (read is the stock market up or down). Corporate statements can skate around pending obligations and still comply with accounting standards and rules of disclosure.

Markets are fixated on quarterly results, yet pensions costs are only reconsidered every three years. Pension contributions need to be adjusted annually. This avoids reality suspensions followed by the obligatory unforeseen circumstances statement. By adjusting annually investors achieve transparency coupled with conscious understanding of financial reality. If its bad news then so be it. Your first loss is usually your sweetest. Investing is a full body contact endevour. Waiting three years only generates mega problems.