Pensions & Other Post-Employment Benefits 2014

OPEB Obligation vs Pension PBO

During 2014, obligations for other post-employment benefits (OPEB) provided by U.S. corporations continued to decline relative to projected benefit obligations (PBO) for defined benefit pension plans. Pension PBO itself is a moving target — although remeasurement at lower interest rates at the end of 2014 led to sharp increases in PBO, the aggregate global PBO continues to fade due to accrual freezes implemented by many pension plans. Even so, curtailment of retiree health benefits and other retiree benefits has been more sweeping than the pension freezes, cutting aggregate global OPEB liabilities to less than half the level measured a decade ago.

This chart shows aggregate global results for OPEB expressed as a percentage of PBO for 205 U.S. companies for fiscal years ending in 2000 through 2014. Don’t expect the current trend to ever reverse: eventually non-pension retiree obligations shouldered by employers will dwindle to little or nothing, leaving those responsibilities entirely to Medicare and the individual. For further detail and comment, see my post on OPEB Obligation Abatement.

(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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