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Your Pension Thoughts
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<blockquote data-quote="bluehdmc" data-source="post: 816682" data-attributes="member: 18471"><p>, </p><p></p><p>It was explained ot me by one of the BA's from my local that one of the reasons pensions are "underfunded" was changes in reporting rules. For example if a fund in the begining has say $100 million in it and according to the guidelines it should grow at say 4% a year, in year 2 it should have $104 million, in year 5 somewhere's around $120+ million, etc. etc.</p><p> </p><p>So year 2 where the fund is invested takes a hit and the fund is worth $98 mill, it's underfunded, the next year it's worth $105 mill, well it gained what it lost but it still considered underfunded by the guidelines. It should have been $108+. </p><p> </p><p>This is a simple example but it is why all these funds are considered underfunded. Pension funds are invested by professional money people, when the stock market was roaring along, they made money and were heroes. Then the recession hit and they're recovering but there are also new reporting rules, I would assume some of the rules are a result of the financial meltdown. </p><p></p><p>You say you're investments have recovered everything you lost in the fall but how much have they grown?</p><p>Just look at UPS stock, it's recovered from it's low point during the fall, but with dividend factored in, how much has it grown?</p></blockquote><p></p>
[QUOTE="bluehdmc, post: 816682, member: 18471"] , It was explained ot me by one of the BA's from my local that one of the reasons pensions are "underfunded" was changes in reporting rules. For example if a fund in the begining has say $100 million in it and according to the guidelines it should grow at say 4% a year, in year 2 it should have $104 million, in year 5 somewhere's around $120+ million, etc. etc. So year 2 where the fund is invested takes a hit and the fund is worth $98 mill, it's underfunded, the next year it's worth $105 mill, well it gained what it lost but it still considered underfunded by the guidelines. It should have been $108+. This is a simple example but it is why all these funds are considered underfunded. Pension funds are invested by professional money people, when the stock market was roaring along, they made money and were heroes. Then the recession hit and they're recovering but there are also new reporting rules, I would assume some of the rules are a result of the financial meltdown. You say you're investments have recovered everything you lost in the fall but how much have they grown? Just look at UPS stock, it's recovered from it's low point during the fall, but with dividend factored in, how much has it grown? [/QUOTE]
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