FAS158 Released

This Statement improves financial reporting by requiring an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. [...] An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006.

Biggest change in pension accounting since FAS87. First PPA now this. This is an interesting year to be working in pension.

Course 7

I passed Course 7.

http://examresults.soa.org/course7/c7-seminar071006.htm

I am now an Associate of the Society of Actuaries.

http://www.soa.org/ccm/content/exams-education-jobs/exam-results/new-associates---september-2006/

So now I can actually call myself an actuary.

San Diego County Fund suffers big loss

San Diego County's pension fund (not to be confused with the scandal-ridden city pension fund) was named Public Plan of the Year last April. Its investment returns were consistently ranked at the top of pension funds for its size. It had a winning strategy--at least until this week. Much of the fund's strategy was based on a basket of hedge funds. Overall, the fund had $1.3 billion, or a fifth of its total portfolio, in hedge funds. One of the hedge funds in the county's portfolio was Amaranth Advisors, the Connecticut fund that announced it had suffered big losses in natural gas trading. The county does not know how big its losses will be or will this be just the tip of the iceberg or just an isolated incident. (New York Times)

Let me see if I have this straight. A fund takes the highly risky decision to invest 20% of their assets in hedge funds, some of which invest in things like gas trading futures ... and this earns them the Public Plan of the Year award? What the ...? No wonder the pension industry is such a mess.

Schwarzenegger to the rescue

California Governor Arnold Schwarzenegger (R) stated that he will veto a bill passed by state legislators on August 31 that would have made California the first state to provide health care to all its residents under a single-payer, government-run program. The California Health Insurance Reliability Act (S.B. 840), would have created a publicly financed health care program and agency, the California Health Insurance System, to replace private insurers. Individuals and businesses would have paid an annual premium, based on income, to the state. State funds currently allocated to health care would have also gone into the new program.

Now for something completely different...

Above the Law is on a mission. Our quest: to find the hottest ERISA lawyer in America. Pension law. And yes, it's just as boring as it sounds. But just because a practice area is a sleepy backwater doesn't mean its practitioners can't be hotties. To the contrary, ERISA lawyers have more time than overworked M&A attorneys to tone their bodies at the gym and get facials at the spa. So we're expecting to see some pulchritudinous practitioners in this contest. We'll accept nominations until -- eh, until whenever we feel like it, depending on the response rate. We realize there is a distinct possibility that we will end up with zero nominees for this hotties contest. We'll cross that bridge when we come to it. Assuming we receive enough nominees of both genders, the men and women will compete in separate categories. After this competition, you'll never think of ERISA the same way again. The next time you hear the words "ERISA preemption," instead of getting sleepy, you'll get turned on...

If Boomers Have It All, What's Left?

Baby boomers could become known as the generation that took it all, leaving their successors to pay the bills and take the risks the boomers did not have to accept. Look at pensions. Corporate bigwigs (many of them boomers) are protecting their pensions but reducing or eliminating the benefit for younger employees. Instead, younger workers will get defined contribution plans that put all the risk on their shoulders. Companies have deluded themselves into believing that younger employees welcome, even love, the changes. The changes are modern and hip. Portability, direct control, and risk are in. Young employees may end up doing very well. If not, there is a problem. (The New York Times, 01-Sep-2006, National ed., p. C1)