Bill, I am somewhat confused by your article. I have read it several times. The term Pension Valuation Adjustment is not a term I am familiar with. Is it another measurement of an unfunded liability which is what you say here: It represents the change in value of what taxpayers will have to pay for future benefit promises, to the extent that they are underfunded. ? OR Is the $280m just recognizing for the first time the post retirement benefits for all past employment? If it is non recurring why does it appear in the table and what is the $113.3m in the non pension benefit plans? Does the table not mix expense recognition with funding? Please help.
Barry thanks for writing this. This is a very complex topic and my efforts to make it understandable may not have done the job–obviously you have read the article carefully.
The PVA is the change in unfunded liability. Together with the cash outlay it represents the cost to taxpayers in a year.It can be a mixture of recurring and non-recurring items.
Notwithstanding the name it combines results from pension and non-pension benefits.
The accounting rules for pensions cause changes in liabilities to re recognized more slowly than they actually occur. So if results are adverse, as has happened with the Teacher’s Pension plan and PSSP, the accounting lags the reality. But when plan is changed, such as happened with the PSSP, the accounting rules require the liability to suddenly catch up with reality. That is what happened with the PSSP.
Bill, I am somewhat confused by your article. I have read it several times. The term Pension Valuation Adjustment is not a term I am familiar with. Is it another measurement of an unfunded liability which is what you say here: It represents the change in value of what taxpayers will have to pay for future benefit promises, to the extent that they are underfunded. ? OR Is the $280m just recognizing for the first time the post retirement benefits for all past employment? If it is non recurring why does it appear in the table and what is the $113.3m in the non pension benefit plans? Does the table not mix expense recognition with funding? Please help.
Barry H | January 17, 2014 |
Barry thanks for writing this. This is a very complex topic and my efforts to make it understandable may not have done the job–obviously you have read the article carefully.
The PVA is the change in unfunded liability. Together with the cash outlay it represents the cost to taxpayers in a year.It can be a mixture of recurring and non-recurring items.
Notwithstanding the name it combines results from pension and non-pension benefits.
The accounting rules for pensions cause changes in liabilities to re recognized more slowly than they actually occur. So if results are adverse, as has happened with the Teacher’s Pension plan and PSSP, the accounting lags the reality. But when plan is changed, such as happened with the PSSP, the accounting rules require the liability to suddenly catch up with reality. That is what happened with the PSSP.
Bill | January 18, 2014 |