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Abstract: 

Recent years have witnessed a spate of new numbers, some of them contradictory, about the funding status of state and local government pension plans. Why do pension plans look better funded according to some numbers and worse according to others? Rather than being more or less accurate than one another, each set of numbers emphasizes different aspects of pension finances with potential value to analysts. This article explains how pension numbers are calculated by financial economists and rating agencies, under the old as well as the new pension accounting standards, and it highlights the valuable insights that can be gleaned from each.

Keywords: Pension liability, pension funding, pension valuation, GASB standards, pension accounting

Affiliations:  1: Governmental Accounting Standards Board; 2: Moody’s Investors Service; 3: Rockefeller Institute of Government.