It's that lapsed actuary again.
thedude asked about funding. In theory
, if the actuary responsible for the pension scheme has been doing a good job, there will be enough dosh in the fund to pay out the liabilities even if the company stops paying in (as long as no new members join). Problem is pensions are
very long-term contracts - a 30-year old in the BA scheme could still be drawing a pension in 2050. No-one has a clue what economic conditions will be in ten years (cynics might say 10 months) time, so the scheme actuary has to err on the side of caution, which is what helps to make these schemes expensive.
Civil servants (and MPs) have unfunded schemes - the chancellor simply reaches into our wallets and takes out as much money as he needs each year to pay their pensions (this is why my council tax has gone up £200 - to pay for all the retired policemen!).
NB note the word lapsed above - none of this should be taken to constitute financial advice of any kind.
PS (for those who haven't already gone to sleep) the rest of Europe all have 'pay as you go' schemes (like our civil servants). This gives them a huge, looming problem - as the population ages, we run out of ability to take money from those working and give it to the retired. The UK has largely avoided this problem by funding the pensions payments - this is the real reason why they want us to join the euro
PPS An actuary is someone who always wanted to be an accountant, but didn't have the personality for it ...