Cash balance pension plans: A case of standard-setting inadequacy (original) (raw)
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going research to a wider audience and to facilitate intellectual exchange and debate. The papers have been through a refereeing process and will subsequently be published in a revised form. Requests for permission to reproduce any article or part of the Working Paper should be sent to the publisher of this series. The School of Management, Royal Holloway University of London has over 65 academic staff who are organised into different research groups. Currently research groups include: Accounting, Finance and Economics Strategy and International Business Marketing Technology and Information Management Organisation Studies and Human Resource Management Public Services Management
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GE, IBM, Verizon, SBC Communications all boosted pre-tax earnings by hundreds of millions, if not billions, of defined-benefit pension plans 'fund earnings' while their pension funds are actually under-funded by billions. While consistent with current GAAP standards, management assumes 'expected' rates of returns to be positive at the high single digit levels (≈ +9.5 per cent) whereas actual returns are ranging from negative 10 to 15 per cent. Stakeholders are entitled to intervention at all levels through new statutes, regulations, and professional codes of ethics to eliminate the widespread practice of 'earnings management' and to restore the belief in the quality of reported corporate earnings. Various initiatives by institutions regarding 'pension expensing' -such as by the IASB, FASB, S&P, Merrill Lynch, and many other involved stakeholders are reviewed. The pros/cons of taking definedbenefit pension plan earnings into income, and issues flowing there from, afford an interesting and informative contrast to further investigate and extend the 'earnings management' literature. The paper suggests that initiatives in these regards need to be expanded to beyond mere accounting and actuarial ontology. Broader Board of Directors' driven protocol covering its pension plan fiduciary role and a keener understanding of the cause/effect interplay between executives' rationale for certain decisions in these regards and the potential for inflating their own executive compensation levels is shown to be warranted.
Pension Accounting Treatment: A Review of the Literature
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In December of I 985 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 87 in an attempt to overcome some of the shortfalls of earlier standards for pension accounting under FAS No. 36 and APB Opinion No. 8. (Note 1)
International Journal of Business and Management, 2016
This study aims to assess the performance of the Pension Fund based on the perspective of Political Economy of Accounting (PEA). This study is a multiple case study analysis, with three (3) study sites, Pension Fund A, B, and C. The results showed that the financial performance of the Pension Fund A is excellent, but the hegemony and domination of the employer and the board of trustees is quite high, resulting in the detriment of the interests of pension fund in the form of delay to raise pension benefits. The financial performance of the Pension Fund B is good, yet hegemony and dominance of the employer and the board of trustees is quite high, resulting in the detriment of the interests of pension fund in the form of a decrease in the value of pension benefits. The financial performance of the Pension Fund C is not good, hegemony and domination of the employer and the board of trustees is high enough, which harms the interests of the pension fund in the form of increased pension benefits and transparency of fund management information. The situation illustrates that hegemony and domination has occurred by employers and administrators in the Pension Fund A, B, and C. The three pension funds have failed to provide justice and prosperity to the retired people. Necessary is regulations to reduce the hegemony and domination of employers and board of trustees of pension funds, so that the distribution of power and wealth is more equitable.