By AccountingWEB Staff
The Government Accounting Standards Board (GASB) will propose changes later this month to the method used by most U.S. state and local governments when they report unfunded pension liabilities on their balance sheets. The proposed changes could result in an increase in the amount of liabilities governments will report.
Currently most public pension plans spread the cost of paying off their unfunded pension liabilities, on average, over a 24- to 25-year period, according to Keith Brainard, research director for the National Association of State Retirement Administrators, The Wall Street Journal reports.
The GASB proposals call for government pension plans to record unfunded pension liabilities as if they were paying them off over the remaining service life of employees in the system - an average of about 10 to 15 years for all public plans, Brainard said. Brainard spoke at a Washington conference sponsored by the Pew Center on the States.
The new rules will not change how fast public pension plans must pay off their unfunded obligations, GASB Chairman Robert H. Attmore said at the conference. "We want people to be transparent and disclose exactly what it is they're doing and the market will make their judgments based on that. The economics don't change."
The proposed changes would also make it easier for investors to compare public pension plans across states.
The proposals will be open for public comment for 90 days and are not expected to take effect for two years.