The Government Accounting Standards Board (GASB) hosted public hearings last fall on its proposals to change pension accounting rules, and final standards are expected to be issued soon. In advance of the new standards, the Center for Retirement Research at Boston College recently published “How Would GASB Proposals Affect State and Local Pension Reporting,” a brief written to provide a “heads up” for public employers and pension administrators.The proposals will sharply reduce the reported funded levels of public sector plans, the report says, noting: “It would be unfortunate if the press and politicians characterized these new numbers as evidence of a worsening of the crisis when, in fact, states and localities have already taken numerous steps to put their plans on a more secure footing.”
The report concludes that while “employers and plan administrators should be prepared for funded ratios reported in their financial statements to decline sharply under the new rules,” the accounting changes do not alter the underlying fundamentals. “Policymakers should not let new numbers throw them off the path of sensible reform.”
The Center for Retirement Research GASB brief is online.