You want to use income averaging to spread the liability over several years?
The idea is that all foreign-currency debt should have attached to it an option, exercisable at the discretion of the borrower, to roll the liability over (for three to six months, say) at a penalty rate.This option would be supplied only at some price to the borrower, obviously; the market would determine exactly what that price would be.
With plausible parameter values, our analysis shows that the intermediate liabilities over a full or zero liability are preferable on both economic efficiency and equity grounds.
When the standards were changed, the true horror was revealed: in 2003 the average plan was just 42% funded, so the government had to take over the liabilities of many companies.
That plan, which failed to come to a vote in the General Assembly after negotiations broke down on Friday, would have eliminated the state's unfunded liabilities over the next 30 years, according to the governor's budget office.
Changes in the state employee pension system approved last year do not, in the view of most analysts, come close to addressing the long-term pension liabilities over the horizon.
Because of an editing error, the Market Place column in Business Day yesterday, about a fight over the liabilities of a Barbados-based reinsurer, and whether American International Group or Starr International should assume them, misstated the position of A.I.G.
This is because, for the large complex financial institutions, these creditors cover well over half the liabilities.Emphasis mine.
Liabilities over the next 18 months, Mr. Brace said, including pensions, represent "a huge financial burden on the company".
Savings of £1bn were speculation based on revaluations of scheme liabilities over the next few years, said pension advisers Watson Wyatt.
