Analysts reporting on companies will pay close attention to the disclosures regarding pension benefits. Key points include all of the following except:

Multiple Choice

• because of high assumed discount rates, most pension plans have remained underfunded with funding ratios ranging between 69% and 86% since 2008.

• the common rule of thumb is that a 1% decrease in discount rate would increase PBO by 17.0% whereas a 1% increase would decrease it by 14.5%.

• to help analysts determine whether fund assets are large enough to satisfy currently anticipated pension benefit payouts, FASB ASC Topic 715 requires firms to provide a table that lists the dollar benefits expected to be paid in each of the ensuing five years and in the aggregate for the five years thereafter.

• while companies with overfunded plans can suspend funding for long periods and use the cash for other operating purposes, underfunded plans may reflect past and continuing cash flow difficulties.