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What's In Your Wallet: Part II
A recent Winston column discussed a GAO Report on the precarious condition of multi-employer pension plans. The GAO has now published the latest in its depressing series of pension fund reports: "Publicly Available Reports Provide Useful but Limited Information on Plans' Financial Condition."
This GAO Report explains that there are often big differences between what regulatory reports say about a plan, and what corporate financial statements say about a plan. The user should not be surprised to learn that financial statements report assets in excess of liabilities, while regulatory reports report just the opposite for the same plans.
According to GAO, there is no public information about direct benefit funds that meets all user needs.
GAO explains:
"Under current reporting requirements, regulatory reports are not timely and do not provide information about whether benefits would all be paid were the plan to be terminated. Financial statements can supplement regulatory report data because they are timelier and provide insights into the probability of a company meeting its future pension obligations. However, through December 2003, financial statements have lacked two disclosures important to investors-allocation of pension assets and estimates of future contributions to plans."
The GAO Report identifies a number of changes that would improve the amount and type of information available to users. Unfortunately, most of these changes have not yet been made, and the pension fund time bomb keeps on ticking.
Click for "Publicly Available Reports Provide Useful but limited Information on Plans' Financial Condition."
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