The Government Finance Officers Association (GFOA), has long encouraged and supported strong fiduciary, reporting and disclosure standards for public employee retirement systems (PERS). Recognizing the special information needs in this area of public finance and administration, the GFOA has developed a series of publications to provide guidance to public officials on best practice in the areas of operations, investment policy, accounting procedures, fiduciary standards, and reporting and disclosure of financial information.
Since passage of the Employee Retirement Income Security Act, in 1974, which regulates private sector pension plans, Congress has deliberated over federal involvement in the setting of conforming standards for state and local government retirement systems. In 1978, the Pension Task Force Report, issued by the House Committee on Education and Labor, recommended federal regulation of PERS. Legislative proposals have been introduced in each successive Congress to establish federal rules for state and local government retirement systems. However, during this period PERS have made great strides in funding future pension obligations, following prudent investment policies, disseminating information and implementing administrative and operational discipline. These advances have been made without the intervention of the federal government.
The GFOA believes that adoption and enforcement of standards for state and local governments to operate PERS for the exclusive benefit of plan participants is the responsibility of state and local government units. These public pension plans are backed by on-going governmental entities that have the sole responsibility for funding PERS and meeting benefit obligations.
Federal legislation that would mandate certain standardized reports, actuarial and accounting analysis, and disclosures to plan participants in addition to establishing fiduciary standards for plan trustees, managers, and other co-fiduciaries is redundant. State and local government statutes already require adequate controls.
GFOA restates its opposition to federal involvement in the area of state and local government employee retirement systems. Therefore, GFOA suggests that all levels of government consult on each of their concerns to best protect the rights of plan participants, beneficiaries, fiduciaries and general taxpayers.
- Publication date: June 1992