Boeing Frontiers
December 2002/January 2003
Volume 01, Issue 08
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Focus on Finance
Clearing the air on pensions

Clearing the air on pensionsThe business media has been buzzing lately about corporate pension plans. You're probably hearing phrases like ''under-funded plans,'' ''charges to equity'' and statements about ''likely future financial impacts'' that involve some pretty substantial dollar amounts.

Indeed, when Boeing announced its third-quarter results in October, the company indicated it is likely to recognize a significant, non-cash, pension-related charge to equity in the fourth quarter.

What does all of this really mean and how does it affect Boeing employees' pensions? The short answer is that Boeing is committed to maintaining strong and secure pension funds for its retirees and employees.


Terms of retirement: Key pension phrases

A critical part of understanding how pension plans work involves learning the definitions of important terms.

Assets: In general: possessions that have value in an exchange. In pension plan discussions: the money available to meet a plan's obligations.

Discount rate: The rate of interest used to calculate the present value of a number of future payments.

Liabilities: A financial obligation such as a cash outlay that must be made at a specific time to satisfy the obligation's contractual terms.

Present value: The amount of cash today that is equivalent in value to a payment, or to a stream of payments, to be made (or received) in the future.

Trust fund: The monies kept in a trust, which is a fiduciary relationship in which one party (the trustee) holds the title to assets for the benefit of the beneficiary.



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