A Blue Ribbon Panel on Public Pension Funding has been convened by the Society of Actuaries to assess the current state of pension plan funding and make recommendations to improve the financial strength of public pension going forward.

Members of the panel came from a variety of disciplines and interest groups to ensure the panel examined the issue from multiple perspectives. The panel began its work in early 2013. The panel's formation comes as many federal, state and local pension plans continue to struggle with unfunded pension liabilities for the past several years.

The panel sets out three principles of an effective public pension funding program.

  1. The costs of future retirement benefits should be pre-funded, and funded in a way that targets 100 percent funding of plan obligations. Median economic assumptions should be used to avoid being overly optimistic or pessimistic.
  2. Taxpayers receiving the benefit of today's public employees' services should pay the taxpayer portion of the costs of those employees' pension benefits; funding programs should restrain the tendency to shift these costs to future generations of taxpayers.
  3. While the panel believes that stable costs will be difficult to achieve, it does recognize the benefits that predictable costs can bring to the sponsor's budgeting processes over short periods of time.

The panel recommended that public entities improve their financial management and information.

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.