Executive summary Essay Example | Topics and Well Written Essays - 500 words - 1

Executive summary - Essay Example However, he did not provide concrete assurance of the accounting tactic. This puts the financial position of pension companies at stake. In addition, this is controversial since the move could undermine governments efforts to support, by placing against something solid or rigid, the pension system. As a result, workers worry on the strain the tactic will put on other government agencies designed to protect the retirement of workers. The policy make companies pile up pension bills. In the end, companies struggle to keep up with the mounting bills. It therefore, becomes hard for them to compensate their clients ending up losing customer trust. They become insolvent and unable to meet their obligations to retirees down the road (Monga, 2). Decline in interest rates increases the present value of the deferred pensions. This increases corporate pension deficit since the monetary value of money decreases with time. This is clearly confirmed by Millan who asserts that the largest pensions in U.S have accrued up to $252 billion funding deficiency, which has shot up by $66 billion within a period of one year. Furthermore, Pension Benefit Guaranty Corporation encounters significant financial challenges. It is funded by premiums paid by pension plans that depend on how many beneficiaries are in a plan. However, those premiums are not enough to cover the costs. When the trust funds are finished, the most likely solution will be a transfer from general revenues, meaning that taxpayers will incur the bill (Monga, 2). Financial management and accountancy for a company is fundamental. With the implementation of the policy, corporations are compelled to channel their cash to activities they had not planned for. For instance, International Paper Company had set aside $ 1 billion to fund its $12.5 billion plan. With this policy, the money had to be put to other investments and projects not