The comptroller is considering cutting the $133 billion pension fund’s expected rate of return to as low as 7.5 percent, DiNapoli spokesman Robert Whalen said, a move that could sock local taxpayers with hundreds of millions — if not billions — of dollars in new costs.
Source: New York Post, August 21, 2010
Wait till public companies begin biting the bullet. The adjustments to cash flow and leverage ratios must be made now. Call us to learn how.
Please see our related articles on pensions and free cash flow implications of underfunding:
- What Investors Don’t Understand About Pension Plans
- Pension Facts: Why The Hit to Earnings and Cash Flow Is Upon Us
- Pensions-Buyer Beware
- CNBC Strategy Session – Underfunded Pensions Earnings Bombshell
- CNBC’s Herb Greenberg – Underfunded Pensions are Red Flag for Investors
- The Next Shoe to Drop?
- The Other Shoe – Part 2
- With 3-, 5-, and 10-Year Stock Returns Negative: Why Are Pension Funds Assuming 8% Returns?
Disclosure: No positions
Kenneth S. Hackel, CFA
President
CT Capital LLC
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If you are interested in learning how to analyze the pension plan, including plan accounting, effect on earnings, cash flow, financial structure and valuation, order “Security Valuation and Risk Analysis” out this fall from McGraw-Hill.
