(StatePoint) There has been a lot of talk lately about the costs of public employee pensions and whether governments have set aside enough money to make good on their promises.
Concerns are real -- and growing -- about these retirement benefits and what must be done to honor the obligations if enough money is not available to cover the benefits public employees have been promised.
When local and state governments have not set enough money aside to adequately fund pension obligations, the conversation very quickly turns to whether making up for the shortfall could mean tax increases, service reductions, or cuts in retirement benefits.
To best understand the size and impact of your government’s pension liability, you should find out what type of pension plan your government offers and its current pension obligations and funded status.
New Standards Offer Transparency
In an effort to equip interested parties with the tools they need to evaluate government pension benefits, new pension standards issued by the Governmental Accounting Standards Board (GASB)—which are set to take effect in 2014— will require state and local governments to plainly show their net liability for pension benefits on the face of the financial statements, alongside other liabilities. The GASB is the independent group that sets accounting and financial reporting standards for U.S. state and local governments.
Under the new standards, anyone interested in pension information will be better able to assess a government’s overall financial picture as it relates to pensions by helping them evaluate such questions as: What pension promises has my government made? How much is it obligated to pay? How is my government doing compared to other communities?
Where to Find This Information
While governments are becoming familiar with and preparing for the new financial reporting standards, there are steps that taxpayers and public employees can take to better understand their governments’ financial obligations:
• Contact your government officials: Ask how your elected officials are preparing for the changes and how they will address funding pension benefits.
• Get talking: Talk to friends, neighbors, and colleagues and share what you know. Find out how pension funding issues may affect the future of your community.
• Stay Informed: As a citizen, you can access pension information on your own through Internet searches or government websites that provide access to local financial reports.
Whether local and state governments are prepared to pay promised pension obligations now and in the future are issues that will affect every taxpayer.