Volume 11, No. 15

Panicking Over Pensions:  35 Frequently Asked Questions  The year 2002 has been one scary ride for investors and analysts. Not only did the threat of terrorism lurk in the real world, equally hidden dangers emerged from the financial statements of seemingly rock-solid companies. Enron was the first big thing to turn out to be not so real after all, followed by Adelphia Communications. WorldCom's deceit only reinforced a spreading notion that below the surface, no company was what it seemed. Small wonder then, that investors and analysts began to panic over pensions. They have all the right ingredients to strike fear into the heart: the market misery is evident in every index, it has known effects on pension plans, and the accounting for pension plans is complex, opaque and unsatisfying. At the same time, much can be done to assuage fears. Much of the panic is due to misunderstandings about what the accounting is really saying to financial statement users. The following series of questions and answers addresses the questions most frequently surfacing these days.

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