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The Predictable SurpriseUnraveling the U.S. Retirement System$
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Sylvester J. Schieber

Print publication date: 2012

Print ISBN-13: 9780199890958

Published to Oxford Scholarship Online: April 2015

DOI: 10.1093/acprof:osobl/9780199890958.001.0001

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The Unfolding of a Predictable Defined Benefit Surprise

The Unfolding of a Predictable Defined Benefit Surprise

(p.182) 18 The Unfolding of a Predictable Defined Benefit Surprise
The Predictable Surprise

Sylvester J. Schieber

Oxford University Press

This chapter examines the evolution of price-to-earnings ratios for corporate stocks in the United States from 1981 through the third quarter of 2010. It shows that from the time policymakers started cutting back on funding for employer-sponsored pension plans in the early 1980s until the end of the century, stock values continued to rise. It also looks at the decline in defined benefit pension assets and the increase in pension liabilities in the wake of equity market declines, the history of terminations for the largest twenty companies making a claim against the Pension Benefit Guaranty Corporation’s single-employer insurance program, and the structural defects that plague the private pension insurance system. Finally, it considers the Pension Benefit Guaranty Corporation’s exposure to underfunded defined benefit plans.

Keywords:   price-to-earnings ratios, corporate stocks, employer-sponsored pension plans, pension assets, pension liabilities, equity market, Pension Benefit Guaranty Corporation, insurance, defined benefit plans

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