The Pension Committee of the American Academy of Actuaries
finds that while the funded ratio may be a useful measure, understanding a
pension plan's funding progress should not be reduced to a single measure or
benchmark at a single point in time. Pension plans should have a strategy in
place to attain or maintain a funded status of 100% or greater over a
reasonable period of time.
A funded ratio of 80% should not be used as a criterion for
identifying a plan as being either in good financial health or poor financial
health. No single level of funding should be identified as a defining line
between a “healthy” and an “unhealthy” pension plan. All plans should have the
objective of accumulating assets equal to 100% of a relevant pension
obligation, unless reasons for a different target have been clearly identified
and the consequences of that target are well understood.
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