Opinion ID: 1297749
Heading Depth: 1
Heading Rank: 12

Heading: Pension Fund Accruals.

Text: Pacific complains that the commission deducted $628,000 from pension accruals actually paid into Pacific's pension fund and claimed as expense, but failed to find as to the reasonableness of such accruals. Again Pacific provides no reference to the record in explanation of the amount of the deduction it asserts was made. [32] However, it appears that in arriving at claimed test-period pension expense Pacific made adjustments for an increased rate of earnings on the pension fund (i.e., an interest assumption) and for a new pension accrual rate effective October 1, 1963 (i.e., one year after the end of the test period) to give effect to substantially liberalized and increased pension benefits resulting from wage negotiations concluded in September 1963. The accruals thus set up by Pacific included a payment in the course of funding, over a 10-year period, a previously unfunded actuarial reserve requirement; Pacific had requested permission from the Federal Communications Commission for permission to fund this portion over a 20-year period, but that commission had authorized only the 10-year basis. Further, the decision of the California commission now under review includes an extensive treatment and explanation of the pension accrual expense actually allowed to Pacific for the test period. No useful purpose would be served by detailing such treatment here. Suffice it to say that Pacific requested the commission to recognize $38,700,000 annually for relief and pensions, which was $8,033,000 in excess of the amount Pacific had actually recorded for the test year. In arriving at the amount allowed (which according to Pacific resulted in a deduction of $628,000 from the total requested), the commission adjusted test-period pension accruals to reflect a 3 1/4 per cent interest rate (rather than the 3 per cent rate assumed by Pacific), and employment of the remaining cost method of amortizing the unfunded actuarial reserve requirement. This appears reasonable and is supported by the record. American in its July 15, 1963, actuarial report to Pacific recommended use of a 3 1/2 per cent interest rate for 1963  a rate less advantageous to Pacific than that adopted by the commission. Further, the use of the remaining cost method of amortizing the unfunded actuarial reserve requirement, rather than the 10-year amortization period urged by Pacific, also finds support in the record, was found by the commission to be reasonable, and appears consistent with the commission's use of the remaining-life method of calculating depreciation. Pacific attacks the weight that should be accorded evidence supporting the commission's view, rather than its own, but has failed to establish that the decision is arbitrary or unreasonable on this point.