The Post Retirement Benefit of Pension Plans

9. How did the pension plan changes affect Harnischfeger’s financial statements in 1984? Are these changes likely to affect future profits?

As you approach age of 60, it’s time to take benefit of your life long hard work in terms of pension benefits. First, you need to decide at what age you would like to begin your CPP pension benefits. As this decision will impact your total pension benefits for the rest of your life, caution is advised. This article will help you to understand when the best age is to being your Canada Pension Plan (CPP) benefits.

There are many advantages of 401 (k) plans, both for employees and their employers. One major important benefit is that the employee has control over how much money they contribute to their account. In addition all employer contributions and any growth in the capital grow tax-free until withdrawal. If the company matches contributions, it's like getting extra money on top of your salary. Also, unlike a pension, all the savings can be moved from one company's plan to the next (or to an individual retirement account) if a participant changes jobs (Neiters). Another benefit can be that employees can reduce their taxes because they are reducing their taxable income while they are working and because they will be in a lower tax bracket when they begin making distributions. "The major cause for the huge popularity of

The Chicago Fire Department and The Chicago Police Department are in danger of losing their pensions. These brave men and women put their lives on the line every day and this is how the government repays them. This is not securing their future of retirement. Citizens believe that our first responder’s pensions should be a high priority to Chicago’s to-do list. This City of Chicago owes these brave men and women a pension like they promised and if that means cutting funds to other things, then it should be done. The pension secures the men and women’s future of retirement, and by taking it away from them it may create unstable lives.

One of the most hotly debated topics in this year’s election is the municipal pension system. For years, it has gone without a cost of living adjustment, leaving former employees with less and less money each year.

As you may know there are two types of pension plans that are most commonly used: a defined contribution plan and a defined benefit plan. “A defined contribution plan sets forth a certain amount that the employer is to contribute to the plan each period (Schroeder, Clark, & Cathey, "Pensions and Other Postretirement Benefits," 2011). “A defined benefit plan specifies the amount of pension benefits to be paid out to plan recipients in the future. Companies that use this plan must make sufficient contributions to the funding agency in order to meet benefit requirements

Interest cost is the imputed interest on the liability during the year. The pension obligation also changes because of actuarial gains or losses that occur with the pension plan when the actuaries change their assumptions. For example, the pension liability will decrease and the company will record an actuarial gain if the actuary reduces the present value of the expected future payments (for example, by increasing the discount rate or decreasing the rate of wage increases). Last, the pension obligation decreases when benefits are paid to retirees. Paying benefits satisfies the obligation. c. The pension plan‟s assets increase when the assets earn a return (interest, dividends, capital appreciation). When securities and investments held by the plan drop in value, the plan‟s assets fall too. The plan assets

Note 11, pages 216-217, describes a number of changes in Harnischfeger’s pension plans in 1984. Describe these changes as clearly as you can. What are the economic consequences of these changes to Harnischfeger and its workers?

The change in the return on investment assumption is for all US plans. The economic consequence is that there will be less injection of cash by these pension owners during the lifetime of their pension. In 1984 the corporation established a new plan, which goal was an improvement in the minimum pension benefit. This constituted in a restructure of the Salaried Employees’ Retirement Plan.

For pensions and post-retirement accounting methods to recognize the benefit costs, estimates and assumptions on future events ascertaining the timing and amount of benefits payments must be sought first. This paper seeks to compare and contrast the early historical accounting for pensions and post-retirement healthcare and life insurance benefits with the rules and guidance applied today in addition to the changes to such guidance and rules that would improve the accounting and reporting of such benefits depending on the business and political changes and as such, predict the effect of such changes on financial reporting and accounting practices.

Political climate change, Political philosophy say that it would not increase or decrease. Political philosophy think that when you are not sure, select the option that minimizes profits and assets. This would have been more conservative if only underfunded plans were book to liabilities and overfunded plans were just reported in documents but no asset booked. Given the extensive assumptions, the certainty of future benefits is not very high. Overfunded plans can turn too underfunded with one deep plunge of the stock market, as happened in fall 2008. According to www.nrln.org an good example, General Motors used pension assets to pay for nearly $3 billion in lump sum severance payouts during 2008 and ended up with such a dangerous degree of under-funding that in early 2009 the Treasury Department restricted the practice as a condition of the federal bailout loan package. In 2012 it terminated its plan for management and salaried retirees entirely. (www.nrln.org)

9. How did the pension plan changes affect Harnischfeger’s financial statements in 1984? Are these changes likely to affect future profits?

Potential area of resistance will be in regards to the unfunded pensions of employees. Possible strategies for this area of

1. In a defined-contribution (DC) pension plan, the employee or employer, or both, make regular contributions to the plan. In the US, employees typically set aside a predetermined percentage of their earnings which is deposited to the plan and the employer will match that contribution. Ultimately, the amount of money available to the individual upon retirement is determined by the performance of their investments. Each employee retains the option to choose how to diversify their investments, while the employer will typically provide a “default allocation” option. The options available are generally very varied, and includes a number of index funds and actively managed mutual funds.

Pension funds are any plans, funds or schemes which provide retirement income. These funds are important to shareholders of listed and private companies and they are particularly important to the stock market which is dominated by large institutional investors. This essay discusses the idea of pension funds and the pension crises. It defines the issues of pension funds, talks about the various pensions, categorizes them, and discusses the pension crisis and its implications to the US in particular and to the world in general.