Surprise, Surprise, New Government Pension Standards Lack in Real Substance

GLEN ALLEN, Va., June 6, 2013 /PRNewswire-USNewswire/ -- State Budget Solutions, a national nonprofit dedicated to fiscal responsibility and pension reform, released a study analyzing updated standards put in place by the Government Accounting Standards Board (GASB). The GASB has issued new standards in an effort to increase the transparency of how public pension plans report their assets and liabilities.

"GASB's revised standards are essentially a slightly modified continuation of a disaster than a sharp turn towards transparency and sound management. They continue to ignore basic economic truths, may encourage risky investment practices and are riddled with possible unintended consequences. In addition they do not address how employers should calculate the annual required contribution  (ARC) required to fund those pensions," said Bob Williams, President of State Budget Solutions.

In a related study, economist Andrew Biggs and State Budget Solutions found that the average public pension plan was just 41 percent funded – meaning plans had assets to pay less than half of their liabilities owed. Yet the updated GASB standards do not force public plans to recognize this reality in their financial reporting.

"Revised standards for discounting pension liabilities and the elimination of Annual Required Contributions from the funding of pension obligations will have the biggest impact. Pensions are vastly underfunded in our country and the day of fiscal reckoning is upon us. The updated GASB standards do nothing to fix the problem or how it is reported, and may in fact hinder the transparency they were supposed to bring about," added Williams.

CLICK HERE to read the entire State Budget Solutions report.

To read Bob Williams full bio CLICK HERE.

About State Budget Solutions
The State Budget Solutions Project is non-partisan, positive, pro-reform, proactive and anchored in fundamental-systemic solutions.  The goal is to successfully engage political journalists/bloggers, state officials and opinion leaders in a new way of thinking about state government and budgets, fundamental reforms, transparency and accountability.  Sharing studies and articles, data sets, anecdotes, and compelling narrative about what is happening in state and local budgets, the State Budget Solutions Project presents and disseminates information about every aspect of coming fiscal and economic disasters and, more importantly, highlights fundamental reforms to avoid them.

Check out StateBudgetSolutions.org for more information.

SOURCE State Budget Solutions