Originally Posted by
EXTW
Not quite: see below,
As of January 1, 2010, the AFN indicates the funded level of the A Plan is 96.44%. This
compares with funded levels of 142% in 2008 and 104% in 2009. This decline in the funded
level can be attributed to the following factors:
· The January 2008 figure was artificially high due to the change in the mandatory
retirement age, accompanied with an increase in the discount rate used to calculate the
present value of the benefits earned under the plan.
· The high funded levels for IRC purposes in 2008 and 2009 meant that no A Plan
contributions were required for those plan years, nor were any made.
· Because additional pension benefits are being earned each year, and because previously
accrued benefits move “one year closer to being paid,” there is a natural tendency for the
funded level to decrease unless contributions are made to the plan. This tendency was
counteracted to some extent in the January 2010 figure by above average asset returns in
2009.
Because the plan was underfunded in 2010, a contribution will be required for the 2010 plan
year. This contribution will not be due until September of 2011. Required contributions for the
2011 plan year will have to be made quarterly, so the first one should have been made last
month.
Ok, you got me, I was going from memory. You forgot a part from another document:
Q How does rate of return help fund the amount of money required in the bucket?
A If the A-Plan were 100% funded today, a 9% rate of return would be sufficient to fully fund the pension
Q What has been the rate of return of the A-Plan for the last several years?
A The rate of return in 2003 was 23%. The rate of return in 2004 was 17%. In the last ten years, the average asset return was 13.3%. These are excellent rates of returns on the funds invested by the A-Plan.
My point is the "A" plan is not some gigantic unfunded mess, to replace it with a DC plan would require small contributions into a 401K.