Managing Pension Liabilities: The Road Ahead

FAS 158 (Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans), issued in September 2006, further ups the ante. The rule requires companies to recognize the funded status of their benefit plans, measured as the difference between plan assets at fair value and the benefit obligation, in their annual statements of financial position. "The requirements to account for funding shortfalls caused huge volatility in many companies' income statements," says Jamie Cornell, senior vice president of employer marketing at Fidelity Employer Services Co. "For publicly traded companies, there was the possibility of falling share prices." — R.B.

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