The NFRW is proud to support Congressman Devin Nunes' (R-CA) Public Employee Pension Transparency Act to bring about a better understanding of the future insolvency of state and local retirement plans to American taxpayers.
Background: Currently, 7 million retirees receive benefits from state and local governments. In addition, 27 million Americans have been promised benefits.
Research shows the the state pension, health care and other retirement benefit plans are currently underfunded by $1 trillion. Other research suggests the plans could be underfunded by as much as $3.23 trillion.
Under the current disclosure guidelines, there is a lack of understanding about the value of state and local pension plan assets and liabilities which in turn hinders taxpayers from understanding the financial obligations of their government.
What does the legislation do? State and local pension plans will report two sets of information to the Secretary of Treasury which will be made available to the public on a website.
The first set of numbers will detail current public liabilities based on existing accounting methods-methods largely determined by the pension plan itself. The methods and assumptions used in this first set of numbers will also be reported.
The second set of numbers will detail the current pension liabilities but will do so using uniform guidelines. Those guidelines will include more realistic discount rates, as well as controls to assure assets are counted using a reasonable estimate of fair market value.
State and local governments that refuse to report their public pension liabilities will be denied the ability to issue federally tax-exempt bonds. Federal subsidies of state and local debt would remain unavailable until those entities comply with public pension transparency rules.
Congress would preempt any calls for a federal bailout by making a clear policy statement that the American taxpayer will not bailout state and local governments that have recklessly promised unaffordable benefits to their workers.
-Information courtesy of "Public Pension Reform: Transparency and No Bailouts" Office of Congressman Devin Nunes
Read the bill at www.thomas.gov