Retirement benefits for employees of state and local government have been changed considerably over the last decade.
This change has come in many forms, including benefit reductions, increasing requirements for benefit eligibility, and increased contributions from both employees and their public employers, the Center for State and Local Government Excellence notes in a report.
At the same time, pension funds have experienced significant losses as a result of the 2008-09 market decline, followed by more recent investment gains. As employees, policy makers, the media, taxpayers, and other stakeholder groups continue to navigate the changing public pension landscape, the importance of complete and timely pension reporting and communication continues to increase, according to the Center.
“Public Pension Reporting and Disclosure: The Current State of Practice and Examples of What Works Well,” developed by the Center for State and Local Government Excellence with input and assistance from the National Association of State Retirement Administrators, finds 72 of the 83 systems in the sample follow the Government Finance Officers Association (GFOA) reporting standards in producing their comprehensive annual financial reports (CAFR), with nearly half of the sample also developing a plain language or popular annual financial report.
Virtually all the systems in the sample develop an actuarial valuation (annually), an experience study (at an average of every five years), and have a funding policy produced by the system and/or established in state statute.
Almost all the systems in the sample disclose investment fees; all the systems that do offer the information online. Also, all the systems compare the performance of every major asset class against a relevant benchmark; nearly every system offers information on benchmark comparisons online, in the CAFR, or both.
The analysis found certain themes surface with regard to systems that have developed robust communication and financial reporting initiatives:
- the importance of active, two-way communication between the system and all stakeholders;
- the identification of communication and reporting as a priority by system leadership;
- the engagement of all stakeholders, even critics, before, during, and after the implementation of policy, benefit, and programmatic changes; and
- the openness to using social media technologies and/or establishing formal structures (e.g., advisory committees) to garner detailed feedback from a range of stakeholders.