<nobr>May 23, 2003</nobr>

ERIC Letter to FASB Over Cash Balance Discount Rates

A letter to FASB regarding ERIC’s profound concern regarding an issue that may be included in the minutes of the May 15th EITF meeting that are now scheduled to be presented to the Board for ratification on May 28th.

The issue relates to the discount rate used to value the liabilities under cash balance plans that credit participants’ accounts with a market-related interest rate. We understand that, at the end of the EITF’s May 15th meeting, a member of the FASB staff commented that, in the case of a cash balance plan that credits participants’ cash balance accounts with a market-related interest rate, the plan’s liabilities must be valued using that same interest rate. We understand that the EITF’s minutes are likely to include this comment.
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