Coca Cola and Pepsi: a Comparative Study of Pension Plans, Investment and Employment Preference Essay Example
Running Head: COCA COLA AND PEPSI A COMPERATIVE STUDY
Coca cola and Pepsi: A comparative study of Pension plans, investment and Employment preference
April Oaks-Brunson
Ms. Brenda Adams
Intermediate Accounting III
February, 18,2011
COCA COLA AND PEPSI A COMPERATIVE STUDY
Coca cola and Pepsi: A comparative study of Pension plans, investment and Employment preference
Pension and Postretirement Benefit Plans The Coca cola has a non-contributory pension plan covering substantially all non- union employees and one non-contributory pension plan covering certain union employees. Costs of the plans are charged to current operations and consist of several components of net periodic pension cost based on various actuarial assumptions regarding future experience of the plans. In addition, certain other union employees are covered by plans provided by their respective union organizations and the Company expenses amounts as paid in accordance with union agreements. The Company recognizes the cost of postretirement benefits, which consist principally of medical benefits, during employees’ periods of active service. The Coca-Cola Co. is adopting a cash-balance pension plan for new and current employees. Under the cash-balance plan design, employees will receive annual age-heighted credits equal to a percentage of pay. Those credits will start at 3 percent of pay and increase with age. Employees’ cash-balance plan accounts also will be credited with interest. Coca-Cola’s move to a cash-balance plan comes at a time when many major employers are phasing out their defined-benefit plans and offering only defined-contribution plans. But Coca-Cola executives rejected such an approach.
Coca-Cola, which last year reported $31.9 billion in operating revenue—up from $28.9 billion in 2007—is the third major employer to adopt a cash-balance plan since 2006, when Congress passed the Pension Protection Act.
On the
Coca cola and Pepsi: A comparative study of Pension plans, investment and Employment preference
April Oaks-Brunson
Ms. Brenda Adams
Intermediate Accounting III
February, 18,2011
COCA COLA AND PEPSI A COMPERATIVE STUDY
Coca cola and Pepsi: A comparative study of Pension plans, investment and Employment preference
Pension and Postretirement Benefit Plans The Coca cola has a non-contributory pension plan covering substantially all non- union employees and one non-contributory pension plan covering certain union employees. Costs of the plans are charged to current operations and consist of several components of net periodic pension cost based on various actuarial assumptions regarding future experience of the plans. In addition, certain other union employees are covered by plans provided by their respective union organizations and the Company expenses amounts as paid in accordance with union agreements. The Company recognizes the cost of postretirement benefits, which consist principally of medical benefits, during employees’ periods of active service. The Coca-Cola Co. is adopting a cash-balance pension plan for new and current employees. Under the cash-balance plan design, employees will receive annual age-heighted credits equal to a percentage of pay. Those credits will start at 3 percent of pay and increase with age. Employees’ cash-balance plan accounts also will be credited with interest. Coca-Cola’s move to a cash-balance plan comes at a time when many major employers are phasing out their defined-benefit plans and offering only defined-contribution plans. But Coca-Cola executives rejected such an approach.
Coca-Cola, which last year reported $31.9 billion in operating revenue—up from $28.9 billion in 2007—is the third major employer to adopt a cash-balance plan since 2006, when Congress passed the Pension Protection Act.
On the