The June 15, 1999, Wall Street Journal included an article by Ellen E. Schultz entitled “Companies Reap a Gain off Fat Pension Plans.”

Instructions Read the article and answer the following questions.

(a) Explain how the high investment returns earned on pension plan assets in the late 1990s affected pension expense and net income. Given the down or “bear” market, what do you believe might happen to many companies’ pension expense in the future?

(b) Explain what effect an overfunded pension plan can have on decisions made by management regarding various benefit costs.

(c) What is a major disadvantage of getting a pension plan too overfunded?

(d) What ethical issues are raised at the end of this article?