Welcome to the World of 'Pension Smoothing'

[mahatmakanejeeves]

I really don't have the time to read The Wall Street Journal. thoroughly, but I miss it at my own risk.

Welcome to the World of 'Pension Smoothing'

New Bill Extends Provision That Allows Firms to Delay Making Pension Contributions
By Vipal Monga
Aug. 11, 2014 7:35 p.m. ET

A government accounting maneuver to pay for road repairs, subways and buses will allow many U.S. businesses to delay billions of dollars in pension contributions for retirees.

President Barack Obama on Friday signed a $10.8 billion transportation bill that extends a "pension-smoothing" provision for another 10 months. In short: companies can delay making mandatory pension contributions, but because those payments are tax-deductible some businesses will pay slightly higher tax bills, which will help pay for the legislation. ... Companies with 100 of the country's largest pensions were expected to contribute $44 billion to their plans this year, but that could be slashed by 30% next year, estimated John Ehrhardt, an actuary at consulting firm Milliman.

International Paper Co., for example, had planned to set aside $1 billion by 2016 to fund its $12.5 billion U.S. defined benefit plan. The paper company says it now expects to funnel that money into other projects, including share buybacks or investments in new plants. ... "It means more cash for us," says Chief Financial Officer Carol Roberts.

But the accounting tactic is controversial. The government's moves could undermine its own efforts to shore up the pension system. Some worry about the strain it could put on the government agency tasked with protecting the retirement of 44 million workers. ... "To use the federal pension insurance program to pay for wholly unrelated spending initiatives is just bad public policy," said Brad Belt, former executive director of the Pension Benefit Guaranty Corporation, the government's pension insurer. "It has adverse implications for the funding of corporate pension plans."

[djean111]

1. Next comes Social Security.

This crap is starting to remind me of that old and excellent Blondie song - One way or another I'm gonna find ya,
I'm gonna getcha getcha getcha getcha.....banks and Wall Street and corporations just looking around for piles of money to steal.

[pscot]

2. And yet the Post Office

is required to prepay 75 years worth of pension benefits.

[kickysnana]

3. +1000

[mahatmakanejeeves]

4. Good point. I hadn't thought of that. NT