National Developments

10
Mar
2016

How Big a Burden Are State and Local OPEB Benefits?

Categories: National Developments,OPEB/GASB 45/75

The Center for State and Local Government Excellence has released a new issue brief that examines the unfunded liabilities of retiree health benefits to state and local governments.The three key insights are: (1) Aggregate unfunded OPEB liabilities are an estimated $862 billion – nearly two thirds of which is held at the local level; (2) these unfunded liabilities are equivalent to 28 percent of the unfunded liabilities of pensions (using the OPEB interest rate for pensions); and (3) while OPEB liabilities are large, several factors – such as sponsors’ flexibility to scale back benefits – limit their potential drain on resources.

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13
Jan
2016

South Carolina pension system faces $11 billion shortfall

Categories: National Developments

South Carolina should change its pension system to address a shortfall of up to $11 billion in 2043, according to a report on the state’s pension system released in late December. Other suggestions include having the state decrease the time it takes to pay off new pension debt and to potentially cap alternative investments — including real estate, hedge funds and private equity — which charge high fees.

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21
Nov
2015

GASB 75 – OPEB Liabilities Take Center Stage

Categories: California Developments,National Developments,New England Developments,OPEB/GASB 45/75

Recently announced GASB Statement 75 will significantly alter the reporting standards of GASB 45, escalating OPEB liabilities and increasing pressure on public agencies to prefund these obligations. Beginning in 2017, GASB 75 will move accounting for OPEB liabilities from a footnote on financial statements directly to balance sheets and change the way liabilities are calculated.

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08
Sep
2015

Public Pension Funds Roll Back Return Targets

Categories: National Developments,Pension Rate Stabilization

Few managers count on returns of 8%-plus a year anymore; governments scramble to make up funding. Moving expectations below 8% has real-life consequences for systems that use these predictions to calculate the present value of obligations owed to retirees. A drop of one percentage point will typically boost pension liabilities by 12%.

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07
Aug
2015

Higher Fees Are Fruitless for Pension Funds, Think Tank Says

Categories: National Developments

According to a new study by conservative Maryland Public Policy Institute (MPPI), state pension funds that paid the highest in fees recorded inferior average returns than those with the lowest fees over five years ending June 30, 2014—a period that encompasses one of the strongest bull markets in history.

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