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Author: U S Government Accountability Office (G Publisher: BiblioGov ISBN: 9781289150358 Category : Languages : en Pages : 142
Book Description
Congress is considering establishing federal standards for state and local government pension plans similar to those imposed on private plans by the Employee Retirement Income Security Act of 1974. The act generally provides that the minimum standard for pension funding by private employers be an annual contribution for normal costs plus the amount needed to amortize current unfunded liabilities in 40 equal annual installments. Public pensions are becoming a large financial burden on state and local governments, and that burden will increase in the future. Many jurisdictions do not systematically fund retirement benefits accruing to their employees. Adopting a pension plan funding standard similar to that required by the act would have serious initial impact on some jurisdictions. During the years the plans are on a pay-as-you-go basis, their unfunded liabilities will continue to grow. At the end of the amortization period of 40 years required for private plans, their unfunded liabilities will more than triple and yearly pay-as-you-go contributions will increase several fold. To protect the pension benefits earned by public employees and to avert fiscal disaster, state and local governments need to fund the normal or current cost of their pension plans on an annual basis and amortize the plans' unfunded liabilities. Although sponsoring governments are responsible for sound funding of state and local government plans, the federal government has substantial interest in these pension plans. Many jurisdictions have increasingly relied on federal grant funds and revenue sharing to help meet pension plan costs. These plans directly affect the continued well-being and security of millions of state and local government employees and their dependents.
Author: U S Government Accountability Office (G Publisher: BiblioGov ISBN: 9781289150358 Category : Languages : en Pages : 142
Book Description
Congress is considering establishing federal standards for state and local government pension plans similar to those imposed on private plans by the Employee Retirement Income Security Act of 1974. The act generally provides that the minimum standard for pension funding by private employers be an annual contribution for normal costs plus the amount needed to amortize current unfunded liabilities in 40 equal annual installments. Public pensions are becoming a large financial burden on state and local governments, and that burden will increase in the future. Many jurisdictions do not systematically fund retirement benefits accruing to their employees. Adopting a pension plan funding standard similar to that required by the act would have serious initial impact on some jurisdictions. During the years the plans are on a pay-as-you-go basis, their unfunded liabilities will continue to grow. At the end of the amortization period of 40 years required for private plans, their unfunded liabilities will more than triple and yearly pay-as-you-go contributions will increase several fold. To protect the pension benefits earned by public employees and to avert fiscal disaster, state and local governments need to fund the normal or current cost of their pension plans on an annual basis and amortize the plans' unfunded liabilities. Although sponsoring governments are responsible for sound funding of state and local government plans, the federal government has substantial interest in these pension plans. Many jurisdictions have increasingly relied on federal grant funds and revenue sharing to help meet pension plan costs. These plans directly affect the continued well-being and security of millions of state and local government employees and their dependents.
Author: Barbara D. Bovbjerg Publisher: DIANE Publishing ISBN: 1437907776 Category : Law Languages : en Pages : 28
Book Description
Millions of state and local gov¿t. employees are promised pension benefits when they retire. There is a fed. interest in ensuring that all Americans have a secure retirement. Recently, new accounting standards have called for the reporting of liabilities for future retiree health benefits. It is unclear what actions state and local governments may take once the extent of these liabilities becomes clear, but such anticipated fiscal and economic challenges have raised questions about the unfunded liabilities for state and local retiree benefits. This is a report on: (1) the current structure of state and local gov¿t. pension plans and how pension benefits are protected and managed; and (2) the current funded status of state and local gov¿t. pension plans. Charts.
Author: United States Government Accountability Office Publisher: Createspace Independent Publishing Platform ISBN: 9781976205835 Category : Languages : en Pages : 32
Book Description
Pension and other retiree benefits for state and local government employees represent liabilities for state and local governments and ultimately a burden for state and local taxpayers. Since 1986, accounting standards have required state and local governments to report their unfunded pension liabilities. Recently, however, standards changed and now call for governments also to report retiree health liabilities. The extent of these liabilities nationwide is not yet known, but some predict they will be very large, possibly exceeding a trillion dollars in present value terms. The federal government has an interest in assuring that all Americans have a secure retirement, as reflected in the federal tax deferral for contributions to both public and private pension plans. Consequently, the GAO was asked to examine: 1) the key measures of the funded status of retiree benefits and 2) the current funded status of retiree benefits. GAO analyzed data on public pensions, reviewed current literature, and interviewed a range of experts on public retiree benefits, actuarial science, and accounting. Three key measures help to understand different aspects of the funded status of state and local government pension and other retiree benefits. First, governments' annual contributions indicate the extent to which governments are keeping up with the benefits as they are accumulating. Second, the funded ratio indicates the percentage of actuarially accrued benefit liabilities covered by the actuarial value of assets. Third, unfunded actuarial accrued liabilities indicate the excess, if any, of liabilities over assets in dollars. Governments have been reporting these three measures for pensions for years, but new accounting standards will also require governments to report the same for retiree health benefits. Because a variety of methods and actuarial assumptions are used to calculate the funded status, different plans cannot be easily compared. Currently, most state and local government pension plans have enough invested resources set aside to keep up with the benefits they are scheduled to pay over the next several decades, but governments offering retiree health benefits generally have large unfunded liabilities. Many experts consider a funded ratio of about 80 percent or better to be sound for government pensions. We found that 58 percent of 65 large pension plans were funded to that level in 2006, a decrease since 2000. Low funded ratios would eventually require the government employer to improve funding, for example, by reducing benefits or by increasing contributions. However, pension benefits are generally not at risk in the near term because current assets and new contributions may be sufficient to pay benefits for several years. Still, many governments have often contributed less than the amount needed to improve or maintain funded ratios. Low contributions raise concerns about the future funded status. For retiree health benefits, studies estimate that the total unfunded actuarial accrued liability for state and local governments lies between $600 billion and $1.6 trillion in present value terms. The unfunded liabilities are large because governments typically have not set aside any funds for the future payment of retiree health benefits as they have for pensions. Percentage of State and Local Pension Plans with Funded Ratios above or below 80 Percent Source: GAO analysis of PFS, PENDAT data.Percentage of plansFiscal yearFunded ratio 80 percent or moreFunded ratio less than 80 percent020406080100200620052004200320022001200019961994
Author: Jonathan Barry Forman Publisher: ISBN: Category : Languages : en Pages : 42
Book Description
Most state and local government employees are covered by traditional final-average-pay pension plans. State and local government employers typically fund those pension plans through a combination of employer and employee contributions, with help from investment returns on already-accumulated assets. Unlike private sector pension plans, however, public pension plans are not subject to strict minimum funding standards like those in the Employee Retirement Income Security Act of 1974 (ERISA). Public pensions also face more flexible accounting standards than private sector pensions. To be sure, many public pensions are nevertheless fairly well funded. Unfortunately, however, the recent meltdown of financial markets, the decline in the stock market, and the recession are putting tremendous pressure on both public pensions and the state and local governments that fund them; and public employers will need to respond.At the outset, this article reviews the operation and funding status of state and local government pension plans. Next, this article discusses the major financial, accounting, and legal issues that relate to the funding of state and local government pension plans. Finally, this article considers how to ensure that public employees will have adequate retirement benefits now and in the future.
Author: U.s. Government Accountability Office Publisher: Createspace Independent Publishing Platform ISBN: 9781974229697 Category : Languages : en Pages : 54
Book Description
" Over 27 million employees and beneficiaries are covered by state and local government pension plans. However, the recent economic downturn and associated budget challenges confronting state and local governments pose some questions as to the sustainability of these plans, and what changes, if any, state and local governments are making to strengthen the financial condition of their pension plans. GAO was asked to examine (1) recent trends in the financial condition of state and local government pension plans and (2) strategies state and local governments are using to manage pension costs and the impacts of these strategies on plans, sponsors, employees, and retirees. To address these topics, GAO analyzed various measures of sector-wide financial condition based on national-level data on pension funding from the U.S. Census Bureau and others, and reviewed information on recent state legislative changes affecting government pensions from annual reports prepared by the National Conference of State Legislatures (NCSL). GAO did not assess the soundness of individual plans, but did obtain documents and conduct interviews with pension and budget officials in eight states and eight localities, selected to illustrate the range of strategies being implemented to meet current and future pension funding requirement. The Internal Revenue Service and"
Author: U S Government Accountability Office (G
Author: U S Government Accountability Office (G
Author: United States. General Accounting Office
Author: United States. General Accounting Office
Author: United States Accounting Office (GAO)
Author: United States Accounting Office (GAO)
Author: United States Accounting Office (GAO)
Author: Barbara D. Bovbjerg
Author: United States Government Accountability Office
Author: Jonathan Barry Forman
Author: U.s. Government Accountability Office