16
4/14/2003
More Pension Accounting
•For Standard
& Poor’s Core Earnings, pension costs include:
–Service
costs
–Interest
costs to the extent that they are not covered by actual returns on plan assets
•Because any
pension gains become part of the pension fund assets for the benefit of retirees and employees, these
are not corporate funds and are
not part of Standard & Poor’s Core Earnings.
•Companies do
not benefit from funds reserved for pension beneficiaries.
•However,
pension plan assets can, actual returns permitting, cover pension interest expense.