For a pension plan (pp), do the expenses/liability increase each year since the annual pp's "expense and employer's liability are determined by calculating the present value of future benefits to be paid to retirees"? I would think that the expenses increase each year because as we get closer to retirement, the money has less time to grow, and assuming the discount rate is same.
Why are pensions accounted for differently than salary/wage and 401K?
There are two types of pension plans, defined benefit plans (where you get a set amount each month for life when you retire) and defined contribution plans (401k type). These plans are not accounted for as a normal company would. The statement of assets available for benefits shows the assets of the plans, usually investments and liabilities (generally unpaid fees to accountants, investment advisors etc.) but not benefits due. The balance is the assets available for benefits. Then there is a statement of cash flows and a statement of changes in net assets (like an income statement) that shows deposits, earnings and withdrawals and fees. These are very specialized and can be difficult to properly understand unless you do some research on them. This may change if FASB changes the rules and requires companies to incorporate these into regular financial statements.
I hope this helps a bit.
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