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Understanding Pension Funding


Perplexed about the new pension calculations? Want to know how to be sure your pension is on track to meet your funding calculations? Curious to find out how your pension plan’s funded status compares with others?

Perplexed about the new pension calculations?  Want to know how to be sure your pension is on track to meet your funding calculations?  Curious to find out how your pension plan’s funded status compares with others?  ICMA has posted new resources on its website and has scheduled a webinar and a conference roundtable discussion to shed light on these issues.

  1.  For a quick summary of the pension calculations you need to understand, take a look at this one-page executive summary to explain the difference in what the Governmental Accounting Standards Board is requiring with its new pension accounting standards, how it differs from what the rating agencies do, and what remains essential for local governments to do to calculate their annual budget costs and long-term funding plan (Books, Bonds, and Budgets:  Understanding New Public Pension Funding Guidelines and Calculations. 
  2. See the recommendations from the Pension Funding Task Force in Pension Funding:  A Guide for Elected Officials. The task force recommends that governments retain an actuarially determined annual required contribution (ARC) for budgeting, policy, and planning purposes. The new GASB accounting standards no longer address pension funding and require local governments to report net pension liability. They go into effect for pension plans in June 2013 and for governments a year later.
  3. Sign up for ICMA’s August 28 webinar on “Getting a Grip on GASB and Pension Funding” with speaker Richard Harris, Finance & Compliance Officer, Denver Employees Retirement Plan (DERP) who will talk about current issues and how the DERP has maintained a well-funded pension plan.
  4. Read the latest analysis of public pensions in The Funding of State and Local Pensions: 2012-2016 by the Center for State and Local Government Excellence. Using current GASB standards, the funded status of public plans declined slightly from 75 percent to 73 percent. Going forward, the funded ratio is expected to move above 80 percent, assuming a healthy stock market.

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