Are local governments adopting optimistic actuarial methods and assumptions for defined benefit pension plans

Bibliographic Data

ID20201263
AuthorsThomas E Vermeer (0000-0002-1955-1860, University of Delaware), Alan K Styles (0000-0003-1624-3237, California State University, San Marcos), Terry K Patton (Midwestern State University)
Year2010
Volume22
Issue4
Pages511-542
Publication date2010-03-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueJournal of Public Budgeting Accounting & Financial Management (JOURNAL)
Journal identifiersISSN: 1096-3367 • E-ISSN: 1945-1814
PublisherEmerald (PUBLISHER)
DOI10.1108/jpbafm-22-04-2010-b003
OpenAlexW2188555675
LanguageEN
Citations received6
References cited18

Recent news articles about pension funding issues highlight the importance of transparent financial reporting and disclosures for defined benefit pension plans. Using pension-related data for local governments in Michigan and Pennsylvania, we provide descriptive evidence regarding the actuarial methods and assumptions adopted and the factors that explain a government’s propensity to adopt optimistic actuarial methods and assumptions that reduce the annual required contribution. Our descriptive data suggests that actuaries are making aggressive assumptions for some governments' pension benefits. Our regression results also suggest there is an association between monitoring mechanisms, fiscal constraints, and socioeconomic factors and the choice of optimistic actuarial methods and assumptions that reduce the annual required contribution. The GASB should consider our findings as they determine whether existing standards should be clarified or whether allowable actuarial methods and assumptions should be restricted

Actuarial science · Business · Descriptive statistics · Economics · Pension · Population · Public economics · Socioeconomic status · demographic modeling and climate adaptation · Financial Literacy, Pension, Retirement Analysis · Housing Market and Economics · Medicine · Finance

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