Warren Buffett warns against irrational assumptions tied to pension returns
Given that Mr. Buffett is widley acknowledged as one of the most savy investors in the United States, I tend to beleive him over a company that lied when they were claiming imminent bankruptcy while funding pensions for the people that put us there.
Having said that, I do acknowledge that reducing the assumed rate of return is problematic in that reduction in the assumed rate would increase the shortfunding position thus requiring larger cash contributions; not exactly the best time for that to happen.
The primary problem is that Sen. Kennedys' bill allowing the continued shortfunding of airline and steel company pensions expires in 2005 creating a ticking time bomb for those companies retaining a DBP.
