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Pension Volatility — Employer Contribution vs Investment Returns

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Pension Employer Contribution vs Asset Return 2014 dec (50)Employer contributions to pension plans, as illustrated and discussed in my previous post, might seem more volatile than corporate finance officers, investors and creditors and other interested parties (such as the pension plan participants) might like to see. Imagine, for instance, if the employer’s “contributions” to direct compensation paid for salaries were as volatile. But compared to pension asset returns, another key factor in the costs of pension plans, employer contributions appear relatively stable.

For 50 U.S. public corporations with calendar fiscal years, this chart shows employer contributions to single-employer defined benefit pension plans (orange smooth line) contrasted with investment returns on the pension plans’ assets (blue volatile line) for 2000 through 2014.

My usual general cautionary notes apply, including that: these numbers include pension contributions to foreign pension plans maintained by some of these employers, as well as the pay-as-you-go contributions to unfunded nonqualified deferred compensation plans for executives. Which I’ll sort out in future revisions to this post.

I’ll be updating this post as more 10-k reports are filed through the remainder of February 2015, then into March and beyond, retaining earlier versions of the post in backpages, as linked in the numbers at the bottom of this post, with oldest versions carrying the higher numbered links.

(As I’ve previously disclaimed, posts such as this represent efforts of my favorite pastime. My formal work does not involve any of this, and none of it represents any position or comment that should in any way be attributed to my employer. Likewise, as always, it represents general personal impressions and should not be treated or used as formal professional advice.)

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Written by macheide

13 February 2015 at 6:18 pm

Posted in άctuary

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