Public pension finances could soon look shakier
NEW YORK (CNNMoney) -- States and cities will soon have to reveal just how big their pension holes are ... and that disclosure is likely to prompt more calls to reform public pension plans.
The Governmental Accounting Standards Board on Monday approved new laws that require governments to disclose their unfunded pension liabilities for the first time.
Currently, states and municipalities report how much they're supposed to contribute to their pensions each year -- and the amount they actually do. But until now, they didn't reveal their total pension obligation and how much they've socked away to cover it.
The new standards will provide "a clearer picture of the size and nature of the financial obligations to current and former employees," said Robert Attmore, GASB's chairman.
The new rules also change the accounting for pension assets and liabilities, in part by requiring states to value assets based on current market prices.
That accounting shift would have increased the funding gap in 2010 by $900 billion, according to estimates by the Center for Retirement Research at Boston College. State and local plans would only have been considered 57% funded -- how much in assets they have to cover their obligations -- rather than 76%.