Reporting for State and Local Government Pension Plans

Abstract

Financial reporting for state and local government pension plans needs to be improved. Although these governmental agencies in recent years have required greater contributions by employees toward their pensions along with increasing the retirement age and service years, reducing cost-of-living benefits, and reducing overtime allowances, investment losses and declining tax revenues stemming from the recession have aggravated the underfunding of their pension plans. Financial reporting of these plans could be enhanced by reflecting more realistic measures of the underlying obligation and the expected long-term rates of return on plan assets. The Government Accounting Standards Board is finalizing a standard to require such information in order to enhance the transparency of reporting on these plans.