While Generally Accepted Accounting Principles require that

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1 ACCOUNTING ISSUES Accounting for Pensions by Victor J. Defeo While Generally Accepted Accounting Principles require that a firm report the economic activities of its pension plans, most of the information is reported in the notes to the financial statements. To properly identify and evaluate the effects that a firm s pension plan may have on its balance sheet and income statement, the analyst must understand the basics of both pension accounting and disclosures. This article provides a review of pension accounting and disclosure as well as a framework for analyzing pension disclosures. Articles in the financial press 1 have focused attention on the impact that pension plans, specifically, defined benefit plans, have had on the operating results, cash flows, and financial condition of business enterprises in recent years. For many firms, pension assets, driven largely by the extended bull market, have grown dramatically relative to total assets and the returns earned on the investment of those assets have served to boost reported earnings. Meantime, for many firms, pension plan liabilities can be substantial. A recent survey of the S&P 100 revealed that pension assets amounted to 50% or more of operating assets for 15 of the firms and exceeded operating assets for four. However, they are not easily identified in the financial statements. The sponsoring firm uses the equity method to account for pension plans, that is, the assets and liabilities of a plan are aggregated and only the net amount is included in the sponsor s balance sheet. Similarly, in its income statement, the sponsoring firm reports only the net cost or benefit of the plan for the current year. To illustrate the pension information disclosed in the notes, Tables 1a, 1b, and 1c contain financial information extracted from the Lucent Technologies, Inc pension footnote. Table 1a contains the data describing the components of Lucent s net pension asset, the liabilities, the (projected) benefit obligation, the assets, and other valuation accounts. In its balance sheet for 1999, Lucent reported neither the pension assets of $41.1 billion nor its pension liability of $27.4 billion amounts that would have 2000 by RMA. Defeo is Associate Professor of Accounting, Visiting, The Wharton School, University of Pennsylvania. 74 The RMA Journal October 2000

2 more than doubled its reported total assets ($38.8 billion) and total liabilities ($25.2 billion). Instead, it reported a net pension asset of $6.1 billion. Table 1b shows Lucent s dis - closure of the income statement effect of its pension plans the net pension cost/benefit for the year. Again, Lucent did not consolidate the individual costs and benefits associated with its pension plans. Instead, it reported only the net effect, a benefit of $0.6 billion in its income statement for Table 1c, contains Lucent s disclosure of assumptions used to determine the reported amounts of its pension assets, liabilities, pension costs, and income for the year. Characteristics of a Defined Benefit Pension Plan To understand pension accounting, it is useful to think of a defined benefit plan as having a single asset and a single liability. The liability. The liability is the obligation of the plan, on behalf of the firm, to pay pensions to its employees in the future. The amount of the liability is determined by three factors: 1. The promises made to employees by the plan, which usually are based on such variable factors as the employees years of service and their future salary levels. The present liability must reflect the extent to which the years of service have already been performed while incorporating assumptions about future service years and salary levels. 2. Actuarial assumptions about future service years and salary levels. These include specific Table 1a Lucent Technologies Net Prepaid Pension Cost September 30, (amounts in millions) Change in benefit obligation Benefit obligation at October 1 $27,846 $23,187 Service cost Interest cost 1,671 1,631 Actuarial (losses) gains (2,182) 3,811 Amendments 1, Benefits paid (1,977) (1,740) Benefit obligation at September 30 $27,401 $27,846 Change in plan assets Fair value of plan assets at October 1 $36,191 $36,204 Actual return on plan assets 7,114 1,914 Company contributions Benefits paid (1,977) (1,740) Other (including transfer of assets from pension to postretirement plans) (275) (199) Fair value of plan assets at September 30 $41,067 $36,191 Funded (unfunded) status of the plan $13,666 $8,345 Unrecognized prior service cost 2,583 1,509 Unrecognized transition asset (645) (944) Unrecognized net gain (9,466) (5,175) Net amount recognized $ 6,138 $ 3,735 Amounts recognized in the Consolidated Balance Sheets consist of: Prepaid pension costs $6,175 $3,754 Accrued benefit liability (63) (44) Intangible asset 9 4 Accumulated other comprehensive income Net amount recognized $ 6,138 $ 3,735 Table 1b Lucent Technologies of Net Pension Cost/Benefit (amounts in millions) Year ended September 30, Components of Net Periodic Benefit Cost Service cost $ 509 $ 331 $ 312 Interest cost on projected benefit obligation 1,671 1,631 1,604 Expected return on plan assets (2,957) (2,384) (2,150) Amortization of unrecognized prior service costs Amortization of transition asset (300) (300) (300) Amortization of net loss Charges for plan curtailments Net pension credit $ (614) $ (558) $ (329) Table 1c Lucent Technologies Pension Valuation Assumptions Year ended September 30, Discount rate 7.25% 6.0% 7.25% Expected return on plan assets 9.0% 9.0% 9.0% Rate of compensation increase 4.5% 4.5% 4.5% assumptions about future employee turnover, wage rate inflation and salary progression, and employee mortality and morbidity. In addition, because the liability is the pres- 75

3 PENSION ASSETS AND LIABILITIES USUALLY ARE SIZABLE AND YEARLY CHANGES IN THEIR VALUE COULD DRIVE THE PENSION EXPENSE TO EXTREMES THAT COULD DOMINATE CORPORATE EARNINGS. ent value of a series of future estimated payments, an interest rate assumption is needed. 3. The actuarial method specified. Under SFAS 87, for accounting purposes, the projected unit credit method is required, and the resultant liability is called the projected benefit obligation (PBO). The pension liability is the best estimate of the amount of assets that should have been accumulated to provide for payment of the expected amount of benefits that have been earned by plan participants. However, it is also a soft number, whose reliability depends upon the quality of the assumptions on which it is based. Because of the importance of those assumptions, SFAS 132 requires that they be disclosed. Thus, as indicated in Table 1c, Lucent reported that a discount rate of 7.25% and an assumed rate of compensation increase of 4.5% were used in the determination of its pension liability for The asset. The single asset of a pension plan is a portfolio of investments of various types: usually financial instruments, but often including real assets, such as real estate, or contractual rights, such as annuities. SFAS 87 specifies that the assets are to be valued at their fair value or at a market-related value. To the extent that the value of the plan assets exceeds the projected benefit obligation, the plan is overfunded. If the value is less than the PBO, the plan is described as underfunded. Thus, with aggregate assets of $41.1 billion and estimated liabilities of $27.7 billion at the end of fiscal 1999, Lucent s pension plans were overfunded by $13.4 billion. It is worth noting that, in its balance sheet, Lucent reported net pension asset of less than one-half of that amount, $6.1 billion. The reasons for the difference will be examined below. To understand pension accounting, it is useful to begin at the simplest of levels, the basic accounting equation: A - L = OE (assets minus liabilities equals owner s equity). By applying the equation to the assets of the pension plan and its PBO, it is clear that if the plan is overfunded, it will have a positive owner s equity with a credit balance. (Conversely, if the plan is underfunded, the owner s equity will be negative having a debit balance). Under the equity method of accounting, a positive net worth for the pension plan corresponds to an asset (debit balance) on the balance sheet of the sponsoring firm. Similarly, a negative net worth will be reported as a liability on the sponsoring firm s balance sheet. Therefore, whatever affects the owner s equity of the pension plan will affect the investment in pension plan account on the balance sheet of the sponsoring firm, and vice versa. Pension Transactions of the Sponsoring Firm The sponsoring firm will typically record only two pension transactions each year. First, it will record the net pension cost for the year. Under some circumstances, the cost can be negative, that is, income. Second, it will record its contribution of assets to the plan as a payment. All transactions of the pension plan itself that affect its owner s equity must also be reflected in one of these two entries. In that way, the balance sheet pension asset or liability for the sponsor always will be equal to the residual owner s equity of the plan. Pension Transactions of the Pension Plan Table 1 presents events that cause a change in the amount of the plan s assets or the amount of its liabilities (PBO); plus signs and minus signs indicate their effects on the plan s accounting equation. For clarity, the accounting equation has been restated from (A - L = OE) to (A = L + OE). Only one of the transactions listed in Table 1 does not affect its owner s equity the payment of benefits to retirees. Of the transactions that do affect the owner s equity, the first one is the employer s contribution. All of the remaining transactions correspond to the different components of pension cost (income) for the period. In aggregate, they equal the amount recorded by the sponsor as its net pension cost for the year. However, Table 2 is presented from the perspective of the plan rather than the 76 The RMA Journal October 2000

4 Table 2 employer. Of the transactions described above, only the employer s cash contributions to the plan are included in the cash flow statement. However, under the indirect method of reporting cash flows, those contributions are not reported explicitly but, rather, as an adjustment in the determination of operating cash flows. While the pension footnote reports the employer s contributions to the plan as a change in plan assets (see Table 1a), these contributions may include noncash amounts. Typically, the employer s cash contributions cannot be determined from an anlysis of the financial statements. Income-Smoothing Provisions of SFAS 87 A pension plan has just one asset, its portfolio, and one liability, its PBO. As might be expected, the pension cost could, and many times would, exhibit large variations from year to year. Pension assets and liabilities usually are sizable and yearly changes in their value could drive the pension expense to extremes Summary of Pension Transactions Owner s Assets = Liabilities + Equity Beginning balances BB BB BB Transactions affecting assets: Receipt of contribution from the sponsor + + Payment of benefits to retirees - - Earnings of the assets, including increases (decreases) in their fair values + _ Transactions affecting the PBO: Interest on the beginning balance + - Additional benefits earned during the year + - Actuarial gains or losses from: Experience different from past assumptions +/- -/+ Changes in assumptions about the future +/- -/+ Changes in benefit formula and/or coverage +/- -/+ Ending balances EB EB EB that could dominate corporate earnings. That is because the pension cost of any one year encompasses all of the following items: 1. Actual return on plan assets. This return includes market gains and losses, both realized and unrealized. Over the long period of time until the final maturity and payment of all pension liabilities, the return on assets might average, say, 10%. But in any one year, the return could be as high as 25-35% in a bull market, or negative in a bear market. Consider the effect of the one-day drop of over 500 points in the Dow Jones average in October Experienced gains and/or losses. The PBO represents an estimate of the firm s current pension liability. But that estimate is based on a number of assumptions about the future. As time passes and facts become available, corrections to the PBO must be made to reflect experience that was different from the actuaries assumptions. 3. Gains and/or losses from changes in actuarial assumptions. The major factor here is the interest rate that is applied to estimated future pension payments in order to measure the PBO at its present value. SFAS 87 requires the PBO to be discounted at a settlement rate of interest, that is, the rate in effect at the balance sheet date at which obligations of the same maturity as the PBO could be purchased. This rate is likely to vary from year to year, and the effect of changing it can be substantial. 4. Prior service cost or benefit from amending or changing the provisions of the plan. When the benefit formula or coverage of a defined benefit plan is changed, the economic status of all of the participants immediately changes. If plan benefits are increased, to the extent the participants have rendered past service, the plan s obligation to them is immediately increased. The plan must recognize this increase by an immediate increase in the PBO. Decreases have similar effects, but in the opposite direction. To avoid the large swings in pension cost (income) that would result under single-asset/single-liability accounting, SFAS 87 requires that the pension plan spread the four items described above over a series of future years. With respect to plan assets, pension cost (income) is reduced not by actual return on assets; rather, it is reduced by the projected return on assets, using the plan s best estimate of its long-run rate of return. Any difference between the projected return 77

5 (included in current period pension cost) and the actual return for the period is deferred and included in the pension costs of later periods. This is why Lucent s reported pension benefit for 1999 included a return on plan assets of approximately $3 billion in spite of the fact that the actual return earned was approximately $7.1 billion. Experienced gains and losses and actuarial gains and/or losses also are deferred. The plan combines them with the deferred gains and losses from investing plan assets in a single unrealized gain or loss account, 2 which is neither an asset nor a liability. The best view of it is that it is owner s equity that is not yet recognized. Consequently, it will not affect the pension accounts of the employer firm. Prior service cost also is spread over several accounting periods. It will be disclosed separately and labeled as unamortized prior service costs. It also is owner s equity not yet recognized and will not affect the pension accounts of the employer firm. Transition to SFAS 87 and the Transition Amount At the adoption date of SFAS 87, most employers had no recorded pension assets or liabilities. Prior to the issuance of SFAS 87, the majority of firms had expensed the same exact amount as they funded. As a result, there was no balance sheet pension account. Those firms that did have balance sheet accounts usually had recorded them in amounts that were not even close to being reciprocal with the real owner s equity of its pension plans under single-asset/single-liability accounting. As a consequence, virtually all employer firms had a transition amount (a cumulative effect) representing the difference between the actual funding position (the amount by which the fair value of the plan assets was different from the PBO) and the funding position shown on the books of the employer at the date the standard was adopted. SFAS 87 stipulated that this difference could only be eliminated in one way, that is, using the prospective method. The accounts of the employer firm could not be adjusted retroactively. Therefore, the owner s equity of the pension plan had to be adjusted to an amount that made it reciprocal to whatever amount existed as a balance sheet account on the sponsor s books at the date when SFAS 87 was adopted. The difference between that owner s equity account and the one that would have appeared under SFAS 87 was called the transition debit or credit. It was treated as a sepa- Table 3 Summary of Effects of Pension Transactions on Pension Accounts Reported Pension Accounts Debits = Credits Assets Prior Projected (Gains) at Service Benefit or Transition Owner s Fair Value Cost Obligation Losses Amount Equity Beginning balances BB BB BB BB BB BB Transactions affecting assets: Receipt of contribution from the sponsor X (X) Payment of benefits to retirees (X) X Earnings of the assets Projected Actual X X (X) (X) Transactions affecting the PBO: Interest on the beginning balance (X) X Additional benefits earned during the year (X) X Actuarial gains or losses from: Experience different from past assumptions X (X) Changes in assumptions about the future X (X) Changes in benefit formula and/or coverage X (X) Amortization: Prior service cost (X) X Net gain or loss X (X) Transition amount X (X) Ending balances EB EB EB EB EB EB 78 The RMA Journal October 2000

6 rate account and was to be amortized over future years. Now, Table 2 can be expanded to include these new accounts. The new accounts are neither assets nor liabilities because they may contain unamortized net losses or costs (and have debit balances) or unamortized net gains or benefits (and have credit balances). For illustrative purposes, it is assumed that there are unamortized net gains and transition amounts (credits) and unamortized past service costs (debits). In addition, the letter X has been used to indicate the dollar amount of a transaction and parentheses to indicate credits. Since it is not known whether the owner s equity of the plan is positive or negative, it has been assume that it is positive (a credit balance). Minimum Pension Liability SFAS 87 requires that a firm report a minimum pension liability if, for any one of its plans, the accumulated benefit liability 3 exceeds the fair value of the plan s assets. For each plan that satisfies this condition, a minimum liability must be disclosed on the employer firm s balance sheet and is measured as the amount by which the plan s accumulated benefit liability exceeds the fair value of the plan s assets. 4 If the balance sheet liability otherwise determined is less than that amount, an entry is required to bring it to that amount. The debit half of that entry is made to an accumulated comprehensive income account in shareholders equity, unless the plan has unamortized prior service costs. To the extent those exist, the debit would be to an intangible asset. While Lucent did not explicitly disclose the fact that, for 1999, one or more of its pension plans met the minimum liability condition, that must be the case. Referring to Table 1a, Lucent reported that for all of its plans combined, the net asset recognized for 1999 was $6,138 million. However, instead of reporting that amount as an asset, Prepaid pension cost, in its balance sheet, it reported that the amounts recognized in the balance sheet consisted of: Prepaid pension costs $6,175 Accrued benefit liability (63) Intangible asset 9 Accumulated other comprehensive income 17 $6,138 The inclusion of these accounts indicates that while the majority of Lucent s plans do not satisfy the condition requiring the recognition of a minimum liability, one or more do. In addition, the amounts related to each class can be inferred: Net prepaid pension cost for plans not meeting minimum liability requirements 6,175 Net pension liability for plans meeting minimum liability requirements (37) Net prepaid pension cost for all plans 6,138 For those plans meeting the minimum liability requirement, prior service costs and unrecognized transition gains/losses amount to $9 million; the excess of the accumulated benefit obligation over the fair value of the plan assets amounts to $63 million, in total. This requires Lucent to recognize an additional liability of $26 million. Thus, in its balance sheet for 1999, Lucent reported the following: For plans not meeting minimum liability requirements: Prepaid pension cost $ 6,175 For plans meeting minimum liability requirements: Intangible asset 9 Accumulated other comprehensive income 17 Accrued benefit liability (63) (37) Net amount recognized $ 6,138 Analysis of Pension Disclosures In this section, the framework outlined in Tables 2 and 3 will be used to derive a schedule analyzing Lucent s pension data. The purpose of the analysis is to link together the related information reported in different parts of the note and to identify the effects of transactions that may not have been explicitly disclosed. The results of the analysis are presented in Table 4 (following page) and discussed below. To begin, the schedule is a matrix containing one column for each of the components of the pension plans balance sheet accounts and an additional column to represent the residual net worth, the owners equity. The first row is the beginning balances reported for each of the pension accounts. (In the table, parentheses are used to denote a credit balance and a credit entry.) Then, the effects of the pension transactions disclosed in the footnote and reported in Tables 1a and 1b are entered in the appropriate column. Care must be taken to ensure that the sign of each entry is properly identified (that is, that each amount is properly recorded as a debit or a credit). Essentially, the objective is to recreate the summary journal entry for each of the reported transactions, following the model outlined in Table 3. By recreating the journal entries, the analysis identifies related information reported in different locations in the footnote. The benefit of conducting 79

7 the analysis in this way is that it makes use of the equality required by the balance sheet equation. That is, for each transaction, the total amount of the debit entries recorded must equal the total amount of the credit entries. For example, in its reconciliation of the beginning and ending balances of the pension liability (benefit obligation), Lucent reported that the liability was increased (credited) by $509, representing the service cost for the year. (See Table 1a.) In Table 4, that information is represented by the credit (increase) of $509 entered in the Pension Obligation column. However, to complete the entry, a debit, equal in amount, must be entered in another of the pension accounts. The only candidate for that debit entry is the owner s equity account, and the debit entry corresponds to the service cost component of the net pension cost/benefit reported in Table 1b. After all of the transactions and events have been recorded in the appropriate columns, the balance (total) for each account/column is derived. If all of the transactions and events affecting the pension accounts have been disclosed, the balance computed for each account should correspond to the reported ending balance for the account. For example, after recording the information, the derived ending balance, in Table 4, for Lucent s pension obligation is 27,401 and corresponds exactly to the ending balance reported in Table 1a. However, if the information disclosed in the note is incomplete, the ending balance for the account derived from the analysis will not correspond to the reported ending balance. This is the case for Lucent. The ending balances derived for unrecognized prior service cost, unrecognized transition asset, unrecognized net gain, and owner s equity do not correspond to the reported amounts. While the differences for the unrecognized prior service cost and the unrecognized transition asset are small and likely to be attributable to rounding, the differences for the unrecognized net gain and owner s equity are more significant and should be examined further. Elsewhere in the pension footnote, Lucent disclosed, Effective October 1, 1998, Lucent changed its method for calculating the Table 4 Analysis of Lucent Technology, Inc. Pension Accounts Unrecognized Pension Pension Prior Transition Gain/ Owner s Obligation Asset Service Cost Asset Loss Equity Begin balance, as reported (27,846) 36,191 1,509 (944) (5,175) (3,735) Enter reported changes in pension obligation from Table 3a Service cost (509) Interest cost (1,671) Actuarial gains/losses 2,182 Amendments (1,534) 1,534 (2,182) Benefits paid 1,977 (1,977) 1,671 Enter reported changes in pension assets from Table 3a Actual return on plan assets 7,114 (7,114) Company contributions 14 (14) Benefits paid (see above) Transfer of assets to postretirement plans (275) 275 Enter components of net periodic benefit/cost from Table 3b Service cost (see above) Interest cost (see above) Expected return on plan assets 2,957 (2,957) Amortization of prior service cost (461) 461 Amortization of transition asset 300 (300) Amortization of net gain/loss (2) 2 (27,401) 41,067 2,582 (644) (11,516) (4,088) Undisclosed changes 1 (1) 2,050 (2,050) Ending balance, as reported (27,401) 41,067 2,583 (645) (9,466) (6,138) 80 The RMA Journal October 2000

8 Accounting for market-related value of plan assets used in determining the expected return-onasset component of annual net pension and postretirement benefit costs. Under the previous accounting method, the calculation of the market-related value of plan assets included only interest and dividends immediately, while all other realized and unrealized gains and losses were amortized on a straight-line basis over a five-year period. The new method used to calculate market-related value includes immediately an amount based on Lucent s historical asset returns and amortizes the difference between that amount and the actual return on a straight-line basis over a five-year period. The new method is preferable under Statement of Financial Accounting Standards No. 87 because it results in calculated plan asset values that are closer to current fair value, thereby lessening the accumulation of unrecognized gains and losses while still mitigating the effects of annual market value fluctuations. The cumulative effect of this accounting change related to periods prior to fiscal year 1999 of $2,150 ($1,308 after tax, or $0.43 and $0.42 per basic and diluted share, respectively) is a one-time, noncash credit to fiscal 1999 earnings. This accounting change also resulted in a reduction in benefit costs in the year ended September 30, 1999 that increased income by $427 ($260 after tax, or $0.09 and $0.08 per basic and diluted share, respectively) as compared with the previous accounting method. [Emphasis added.] To understand the impact of the accounting change on Lucent s pension accounts, recall that the cumulative effect of a change in accounting methods is determined by applying the newly adopted method to all prior years and adjusting the balance sheet accounts accordingly. In this context, Lucent indicated that it had changed its method of estimating the return on pension plan assets. That change, while increasing the estimated returns for prior years, would have no effect on the actual returns earned; thus, it would result in a reduction of the cumulative amount of the unrecognized gain (loss), the balance of the unrecognized gain/loss account, and an increase of the Lucent s recorded equity in the plans. The resultant retroactive increase in the balance of the plan equity account corresponds to the income statement cumulative effect that Lucent reported. The reason the amount of the reported cumulative effect, $2,150, differs from the difference in the unrecognized gain/loss and owner s equity accounts derived from the analysis of Table 4, $2,050, is likely because Lucent applied the change to its accounting for post-retirement benefits in addition to its pension plans. Presumably, the remaining $100 is the effect of the change in accounting methods on the recorded amount of Lucent s liability for post-retirement benefits. Conclusion In order to use accounting data to assess the impact of a firm s pension plans on its financial structure and operating results, an analyst must understand how pension plans are accounted for and how the information is disclosed in the financial statements. To facilitate that task, this article has provided a brief review of the accounting for defined benefit pension plans and a framework for analyzing the effects of pension-related transactions. Because pension-related transactions can have a significant impact on reported earnings and because the effects of those transactions on earnings may be significantly different from their effects on cash flows, lenders should exercise caution. Pension plan assets are not included in cash or cash equivalents; thus, only the effect of the employer s cash contributions to its pension plans is included in the cash flow statement. However, those current contributions may not be representative of future cash flows. Underfunding may require larger contributions in the future. Similarly, overly optimistic assumptions may result in an undervalued pension liability and mask the need for additional employer contributions in the future. Thus, lenders should have a basic understanding of the fund s current status and of the reasonableness of the assumptions employed to estimate the amount of the liability and the return on plan assets. Because of the limitations of the disclosures, this information can best be obtained through discussions with management and/or their accountants. This article has focused exclusively on pension accounting because of the potentially significant impact that pension plan-related transactions can have on financial position, operating results, and cash flows. However, another area that should be of concern to the lender is other post-retirement benefit plans that may be in effect, particularly post-retirement healthcare plans. The accounting for such plans is analogous to the accounting for pension plans. However, in many cases, these plans are significantly underfunded, implying substantial future contributions from the employer. 81

9 Defeo may be contacted by at or by telephone at References Ciesielski, Jack T., Pondering Pensions: Are They Making Money? The Analyst s Accounting Observer, Volume 9, No. 6, May 30, Financial Accounting Standards Board (FASB), Statement of Financial Accounting Standards No. 87, Employers Accounting for Pensions, 1985, Norwalk, CT: FASB. Statement of Financial Accounting Standards No. 132, Employers Disclosures about Pensions and Other Postretirement Benefits, 1997, Norwalk, CT: FASB. Notes 1 Two recent examples are The Perils of Fat Pension Plans, Business Week, April 24, 2000 and Companies Pension Costs Plunged in 99, Wall Street Journal, June 6, This amount must be amortized only if it exceeds 10% of the assets at fair value or the PBO, whichever is larger. If amortization is required, only the excess over that 10% is required to be amortized. 3 The accumulated benefit liability is a measure of the pension obligation, estimated as the present value of the pension benefits payable to employees based on current wage and salary levels rather than on projected future wage and salary levels. 4 The firm must report a minimum liability for each pension plans that meets the conditions specified, even if its plans are overfunded, in aggregate. 82 The RMA Journal October 2000