Minimizing Settement Charges?

I have a number of clients who are getting very close to being able to terminate, but they are reluctant to do so because they don't want to recognize the large unrecognized loss as a Settlement Charge.  These are typically banks where they have always been more concerned about "expense" and less concerned about actual cash.

Is there any way to recognize the unrecognized loss sooner than the 10% corridor would permit?  In other words, is there any way to avoid recognizing the Settlement Charge all in one year?

I think you can use any loss amortization procedure, as long as it provides the 10% corridor as a minimum.  However, IMHO, changing to a different procedure is a change in accounting policy, and someone else has to pass judgement on that.

BTW, I would be interested in hearing any comments about how the auditor feels about such change.

Agree.  Have had clients that fully amortize immediately, don't use the 10% corridor, or amortize over a shorter, fixed number of years (provided it meets the minimum amount).  And I've seen variations of each of these.   Making a change, however, should be ok'd with the auditors.

In my opinion you can modify the actuarial assumption to explicitly recognize the future plan termination date.  Then the shortening of the expected future service will accelerate the annual loss amortization.

I believe the auditors generally prefer for the shorter amortization periods as it is more marked to market.

Don't know specifics here, but has client considered settling out a targetted group of terminated vested (or retirees) with a lump sum window (or annuity purchase)?