Top 10 Reasons to Prefund Your Other Post Employment Benefits

Categories: New England Developments,OPEB/GASB 45/75
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With many agencies facing growing OPEB liabilities, and GASB 75 on the horizon, now is the time for your agency to start addressing its long-term OPEB obligations. Listed below are 10 key advantages that your agency can benefit from by prefunding into a GASB and IRS-compliant OPEB Trust:

  1. Contributions are considered assets on financial statements
  2. Investments can be diversified for a potentially greater rate of return 
  3. Prefunding now will help to offset the budgetary impact of GASB 75, which requires OPEB liabilities be placed onto balance sheets (effective June 16, 2017)
  4. In tough budget years, assets can be used as a “rainy day fund” to cover any OPEB related expenses
  5. Actuaries can use a higher discount rate when calculating the OPEB liability
  6. Actively addressing future obligations can favorably impact your agency’s credit rating
  7. Prefunding can help hedge against health care inflation, longer life expectancies for retirees and the “baby boom” retirement surge
  8. Prefunding now means that future taxpayers/employees will not bear a disproportionate burden of the costs
  9. Funds put into an OPEB Trust are dedicated for future OPEB costs and protected from diversion for other uses
  10. Prefunding is a fiscally prudent measure and considered a “best practice” by GFOA

The PARS OPEB Trust Program can bring your agency all these advantages and more. We offer a full-service, turn-key OPEB Trust vehicle that brings economies of scale, flexible investment options and no start up costs or contribution requirements to local government agencies across the nation. With 200 clients and over $1 billion in assets, our program is the fastest growing in New England and can be set up quickly, through our simple and ready-to-go implementation process.