About Long-Term Pension Liabilities

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Long-term pension liabilities are prevalent in today's world, as many companies do not have nearly enough money set aside to pay for health care, legal care and dental care for their pensioners. Understand the liabilities of long-term pensions with information from a portfolio manager in this free video on finance.

Part of the Video Series: Credits, Stocks & Pension
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Video Transcript

Have you picked up the paper and read about GM or Ford or Chrysler? Hi this is Roger Groh at Groh Asset Management. One of the things that Ford, GM and Chrysler did was to promise that they would pay or make available to the pensioners and their businesses long ago, health care, legal care, dental care and other items and in theory over the years GM and Ford and Chrysler were setting aside large amounts of money to pay for that. But guess what? There's nowhere near enough money today in their tills to pay that bill and that qualifies as an unfunded pension liability. What other industries are likely to see other unfunded pension liabilities? Well how about social security? We've all sure read about the fact that as the boomer's get older and retire, that there is not enough money available to payout given the projections on the amount of money that's needed. Last but not least, it could be as something as simple as your own pension plan in a smaller company where that company much like GM and Ford and Chrysler has agreed to provide health care for you in the future. Look carefully because frequently the cost of medical benefits have gone up far quicker then the amount of money that's been put into the plans or the growth of the investments in the plans and therefore there's a gap between the amount of money that's needed to give you what they said that you were going to receive and what you will probably get. Those are unfunded pension liabilities. They exist in a big way throughout America and the rest of the world. I hope that helps, you can ask your pension and profit sharing plan administrator for data on the specifics in your own plan to help determine if there is an unfunded pension liability awaiting you. I'm Roger Groh with Groh Asset and thank you very much for spending time with me.

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