Until the stock market bubble burst in 2000-2002, most CFOs viewed their defined benefit pension plans as profit centers and relatively risk-free sources of income. Since neither pension assets nor liabilities were reported on corporate balance sheets, and expected returns on pension stocks...

The authors propose a new way to defease the legacy costs of America's defined benefit pension system that will help ensure its viability. The proposal would allow companies to exchange their legacy pension debt for another liability with more attractive terms-to the benefit of the sponsor, the...