GASB to issue Exposure Draft on pension accounting

In anticipation of the Governmental Accounting Standards Board (GASB) issuing its Exposure Drafts outlining new rules for how state and local governments account for their pensions, the National Association of State Retirement Administrators and the National Council on Teacher Retirement issued a joint statement expressing both hope and concern.

In the statement, the organizations expressed concern over the elimanation of the annual required contribution (ARC) on financial statements. The ARC, according to the statement, has provided policymakers and others with a funding target and a tool to know whether pension plan sponsors are making an effort to advance-fund pension costs. Eliminating this tool would drastically change the debt-to-asset ratio of the accounts.