Pension Guide Book and Funding Guidance for Elected OfficialsThe GFOA and other leading organizations representing state and local governments and retirement systems, working together as part of a Pension Funding Task Force in Washington, D.C., released their final report, Pension Funding: A Guide for Elected Officials. The guide, which GFOA members are encouraged to share with their elected officials and other decision makers, provides an overview of defined benefit pension plans, including how such plans are funded and the new standards issued by the Governmental Accounting Standards Board.
The guide also provides recommendations for consideration in adopting pension funding policies. In particular, the guide recommends that pension funding policies be based on the following five general policy objectives:
- Have a pension funding policy that is based on actuarially determined contributions.
- Build funding discipline into the policy to ensure that promised benefits can be paid.
- Maintain intergenerational equity so the cost of employee benefits is paid by the generation of taxpayers who receives services.
- Make employer costs a consistent percentage of payroll.
- Require clear reporting to show how and when pension plans will be fully funded.
Click here for the report.