Unfunded pension liabilities

Has anyone noticed all the recent reports of hits being taken to earnings due to the funding of pension liabilities? Liabilities accruing due to the drop in equities over the last year.

I wish there were a Balance Sheet item (pension expense) which I could use to analyze the impact on earnings these liabilities will have.

Mark

I think it is worthwhile to check whether our new Compustat database can provide some useful pension related items for us.

Recognizing underfunding can help us increase our performance:
Academic paper: Pension Underfunding, Analyst Experience, and Analyst Underreaction
(uses Compustat data)

It is also part of a more extensive EV calculation:
Wikipedia: Enterprise Value

Enterprise value =
common equity at market value
+ preferred equity at market value
+ minority interest at market value, if any
+ debt at market value
+ unfunded pension liabilities and other debt-deemed provisions
- associate company at market value, if any
- cash and cash-equivalents

BUMP

I looked into this a while back. We just plain aren’t receiving any balance sheet items that reflect pensions in our data.

Since this topic came alive again I did some ‘research’:

According to this recent S&P Capital IQ “Research Brief: Exploring Pension Plans” PIT pension data should be available:

Quote: “We primarily use S&P Capital IQ Point-in-Time (PIT) defined benefit pension data for this study. This is a global dataset with a history stretching back to 2004 covering more than 4000 U.S., Canadian, and international companies as of July 2013. For data prior to 2004 (Exhibits 2 and 3) we utilize Compustat’s pension dataset. Compustat provides non-PIT pension data for North American firms dating back to mid 1990’s.”

Any idea why P123 seems not to get this data?

I think that pension obligations are included in LiabNonCurOther. The P123 description does not include it but looking at the Liabilities for GM, it is included there. The problem is that pensions are lumped in with other items. I ran a screen and for Financial sector companies, this item seems to be used for other, bigger items as well. For all, the Pension info also seems to be embedded in Notes which makes it really hard to sleuth. From what I can see of both the balance and income statement items for Pensions, this may be a really hard thing to parse since there is so much spin by the companies. For non-Financial companies, maybe just have a rank rule for minimal LiabNonCurOther/LiabTot. Don’t over think it.

There are different subscription levels for CompuStat data. Our data license gives us access to lots of data, but we’ve found that just because we know that an item exists doesn’t mean that we get it.

Furthermore, sometimes data that exists and that we get doesn’t exist in both annual and interim form, or only starts filling at a certain date in the past. This could also make a line wholly unusable.

In the case of the pension lines, we’re not getting anything. :frowning:

Without detailed balance sheet items we all perform: “Graham-Style Cigar Butt Investing” :frowning: