aftermath

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Archive for February 7th, 2008

Leftover Chicken Spaghetti

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Written by macheide

7 February 2008 at 8:08 pm

Posted in termite

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Up, But Not That Much

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Overall, pension funded status was up for 2007, slightly better than at the end of 2006. But not by the 10 percentage points estimated in a report released this week by a major actuarial firm. Not even close.

That actuarial firm’s rush to get some armchair analysis out to the press has numerous technical problems, way too numerous and too technical for this brief note. But their most egregious blunder is their shockingly superficial projection of employer contributions. First, they perform an incredibly weak projection of service cost that is already significantly off from reality, as might have too easily been confirmed by simple sampling of the 10-Q interim financial statements published by companies during 2007, in which a solid basis for estimating service cost has already been provided. From the emerging effect of the recent rash of pension plan freezes to changes in assumptions, there were too many good reasons they already ought to have sensed their service cost projection was flawed, yet pushed on forward as though nothing were wrong.

Next, they perform one of the most simplistic projection techniques one could devise, presuming the ratio of contributions to service cost for 2006 to remain constant to 2007. That might work for some very simple junior high school level back-of-the-envelope analysis, but seriously, it’s not the kind of math they pay actuaries the big bucks to perform. And here, it’s just plain wrong. The only things keeping any pension contributions going into corporate pension plans during 2007 at all are their foreign plans (no major overall changes in accounting rules or legislation that would alter the factors), non-qualified deferred compensation plans (employer contributions remain driven by benefit payments), pension contributions for utilities (go figure), and companies that had been too cash-strapped to try to do battle against the minimum liability accounting rules that ruled pension contribution strategy before 2006. Take those elements out of the picture – yes, together they are major, but even in combination they are less than half the contribution picture – and you find companies that overall are holding huge – and I mean very very huge – credit balances accumulated via the battle against the minimum liability rules, credit balances that the Pension Protection Act turns against those same plans (or at least gives no incentive for continuing to carry). In plain English: overall for U.S. qualified pension plans, contributions during 2006 were significantly down.

The numbers are still coming in, but for months already we have had more than adequate information sufficient to guess that this actuarial firm’s projection of $40 billion for the 2007 employer contribution for its data set could be as much as double what the actual result comes through as, and most certainly is a good $10 billion too high. Knock just that $10 billion out of their projected pension asset figure, and even before dealing with the other faults in their projection, we have a pension funded status result not quite as good as they hope for. Again, it’s still going to be up – even taking unfunded non-qualified plans and foreign plans into account, 2007 will take the aggregate universe over 100% for the PBO funded status – but don’t put any stock in that line that goes up by a full 10 percentage points. It didn’t happen. Not for the Fortune 1000, not for the S&P 500, not for any industry subset, perhaps not even for any single firm.

Two years ago a very well-known credit-rating firm published an analysis of pension funded status, wherein the data for one out of every three companies included in the data set was seriously flawed, so badly infecting the results that conclusions of the report were seriously incorrect and misleading. Last year a major stock brokerage firm did a better job on the data, but used projection techniques that showed no understanding of how pension accounting rules work, then managed to add to that a projection of investment returns that was incredibly bad given the report’s author, the ultimate conclusion being as far off as the credit-rating firm’s report had been. One would like to hope that a reputable actuarial firm would have done a better job at it. Sadly, that can’t be said to have happened, not based on this particular report.

bumper sticker [www.internetbumperstickers.com] - actuary

Written by macheide

7 February 2008 at 5:21 pm

Posted in άctuary

Weiner Burger with Fries

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I met Susan and Kelly at C&Ds for lunch today, adding a medium pineapple shake. Lunchtime convo: whether or not it’s ok for a man to get an assistant or secretary to handle ordering flowers from a florist for a woman.

bumper sticker [www.internetbumperstickers.com] - termite

Written by macheide

7 February 2008 at 1:31 pm

Posted in termite

Ice on the Driving Machine

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That’s ice on the back windshield, and I know exactly where it came from. Yeah, but this is Houston, so we’ll have temperatures up near 70 before this day is done.

bumper sticker [www.internetbumperstickers.com] - mother nature

Written by macheide

7 February 2008 at 5:58 am

Posted in Mother Nature

Tagged with

foreign shift

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i am pointed to my new desk for my new employer and shown around th part of th floor that comprises our unit, a labyrinth of cubicles on one of th lower floors of th main mbl building. near th short hall to th elevators, where th alcove with my desk and half a dozen others, th space to another unit on th floor has been blocked by a pile of medium-sized boxes. i could use those, so offer to exchange them for a collection of smaller boxes that are of no use to me

several of my new colleagues arrive with a degree of distant admiration for me. at their bus stop during their commute, they had been talking of th new worker they knew they’d be meeting today, and although they had mispronounced my surname, someone else on th bus had known me from earlier work and had spoken of my exploits in rather embarrassingly legendary terms. i shrugged. i had done what i had done, and that was behind me. now i was here

th co-worker who had been assigned to help show me th ropes for our work here pointed me to th need for me to learn french. th two colleagues who had been on th bus had lapsed into a discussion of how they expected all of our work to last no more than 3 to 4 more years before dropping off sharply, one of th workers demonstrating th expected drop with a gesture as he spoke a few words in french. i remarked wryly of being amused at myself for having missed th trend, pointing out that at my former job all our work had already begun shifting to hong kong and paris, so of course everything else would be swallowed up by mergers with french or chinese conglomerates, with th subsequent work then falling to those who were already handling th numbers for those parent organizations

th worker handing me th french materials seemed curious that i appeared to consider these trends dispassionately, without any apparent nervousness over what it might mean to my own personal future. i pointed out by way of contrast that yes my family had been ever so mildly concerned when i had committed to leaving my previous position although not actually having th new position lined up until thursday of my final week with th prior employer, but that i felt assured i would always find th work to do when and where i would need to do it

Bumper Sticker [www.internetbumperstickers.com/] - oneirra

Written by macheide

7 February 2008 at 4:04 am

Posted in oneirra