Analysis of Pension Funding Under Erisa
This paper begins by describing the tax, funding, and insurance aspects of the Pension Reform Act of 1974. Next, the implications of those laws are analyzed from the standpoint of the funding decision of the firm. The tax advantage of early funding appears to be quite small. Because there are insurance and other reasons (related to asymmetries in the pension law) why firms might wish to underfund their plans, there is no good reason to expect all firms to fund to the limit. The final section discusses the magnitude of the firms' unfunded pension liability, properly defined. This debt is shown to be quite small. A major reason for this is the substantial increase in long- term nominal interest rates, which have decreased the present value of accrued benefits and, equally, unfunded pension obligations.
|Date of creation:||Nov 1979|
|Date of revision:|
|Publication status:||published as Bulow, Jeremy. "WHat are Corporate Pension Liabilities?" Quarterly Journal of Economics, Vol. 97, No. 3, (August 1982), pp. 435-452, Contains only a subset of WP#402.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barro, Robert J., 1974.
"Are Government Bonds Net Wealth?,"
3451399, Harvard University Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:0402. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.