U.S. companies have no shortage of reasons for wanting

to phase out their traditional defined benefit (DB) pension plans in favor of less expensive alternatives. Now, add putting a sizable chunk of shareholders' equity at risk to that list.

In November, in response to criticisms about murky disclosures on the funding status of retirement plans, the Financial Accounting Standards Board (FASB) voted unanimously to issue new guidance that would ultimately compel companies to include the difference between their assets and accrued liabilities from pension plans and retiree medical and life insurance plans on corporate balance sheets rather than handle them, as they have, in innocuous footnotes. Although companies do not have to abide by phase one of the new rules until they file yearend 2006 statements, studies are already indicating that the likely impact of the FASB's tougher stance could be a serious reduction in shareholders' equity.