Will the FASB kill pension plans?

There is an article in the Seattle Post Intelligencer today discussing how the FASB's intention to require full recognition of pension assets and liabilities will lead to companies killing their pension plans.

But some experts say new regulations requiring companies to more accurately calculate and show the cost of their retirement promises could speed up the move by employers away from guaranteed pensions and other benefits.

"Changing accounting rules can cause companies to change their behavior," said David Zion, an accounting analyst with Credit Suisse First Boston.

Everyone really should read this entire article. Once again we seem to be going back to the economic consequences argument. I always like to discuss these types of issues with my students to get their opinions on disclosure and measurement issues.

Maybe its not accounting that is doing this but rather short- sighted managers who do not see their employees as partners. I wonder how many of the firms who will end their general pension plans (open to all employees) will maintain their pension plans for high level executives?

For another take on this debate read Slate's article by Daniel Gross: The Cram Down Decade